Rents rise by 2.3% over 12 months
The rental market in England, Scotland and Wales is showing “signs of strength”, according to the Office for National Statistics (ONS).
Its Private Housing Rental Prices Index found that tenants in Great Britain are paying private landlords 2.3% more than they did in August 2015. It cites the example of a property that was rented for £500 a month in August 2015 costing £511.50 a year later.
Rents went up by 2.4% in England and by 0.1% in Wales, but remained static in Scotland at 0% in the 12 months to August 2016. However, the average of 2.3% overall is down 0.1 percentage point compared with the year to July 2016.
While renting privately costs more over the year in all nine of the English regions, the biggest hike was seen in the South East (3.4%), followed by the East of England (3.3%), and London (2.6%).
Meanwhile, the regions with the lowest annual rental price rises were the North East (0.9%), the North West (1.1%) and Yorkshire and The Humber (1.3%).
Comparing data from the UK House Price Index produced by the Land Registry, the ONS found that, on average, house price growth has been stronger than rental price growth. Between January 2013 and August 2016, house prices went up by 6%, while rents increased by 2.1%.
Demand outstrips supply
The ONS suggests that rents have gone up over the year because demand for rentals has outstripped supply, with the Royal Institute of Chartered Surveyors (RICS) reporting a mismatch in supply and demand in the three months to August 2016, according to its Residential Market Survey.
Commenting on the figures, John Willcock, head of mortgages at Post Office Money, says: “These figures highlight the pressure placed on people who are struggling to pay rent, while also trying their hardest to get on to the property ladder.
“Post Office Money research has found we are becoming a nation of ‘forever renters’, with more than eight million people currently renting (40%) believing they will never be able to afford their own home. Aspiring buyers expect to be 34 before they can afford to get on the property ladder, and raising a deposit is the key obstacle. Today’s news that renters have seen an increase of 2.3% in the last year makes this yet more difficult.
“We believe more needs to be done to boost the confidence of first-time buyers and help them to reach their goal of homeownership,” he adds.