Demand for rental properties is currently running at 27% above the 5-year average.
Over the last year, the average rent for a new let increased by 10.1% to stand at £1,166 per month.
That means the average annual rental bill is nearly £1,300 higher than it was a year ago, standing at almost £14,000, compared to £12,700 last September.
This marks the 20th consecutive month of our index reporting rental inflation of over 10%.
However, for renters staying in their existing homes, year-on-year rises are much slower at 5.7%, according to the Index of Rental Prices from the Office for National Statistics.
The table below shows the rates at which rents have increased across different regions of the UK.
Average rent increases by region: November 2023
|Region||Avg rent today||Avg rent 12 months ago||Annual % change||Annual £ change|
|Yorkshire & The Humber||£761||£701||8.6%||£60|
Rental inflation in Scotland boosted by rent controls
Scotland is registering the highest level of rental inflation in the UK at 12.8%.
That’s because landlords are pushing to maximise rents for new tenancies in order to cover increased costs - and to allow for the fact that future rent increases will be limited over the life of the tenancy.
The average rent in Scotland stands at £753, which is £90 higher than a year ago.
Rental inflation in Scotland has now started to moderate down from highs of 13.7% back in February, but we expect it to continue rising at above-average levels.
Rents are growing at the fastest rate in the cities of Edinburgh (16.6%) and Glasgow (13.4%) .
But renters looking for new lets in areas between these two cities will also notice sharp increases: in Falkirk rents are up 14.7% year-on-year, while in North Lanarkshire they’ve risen 13.9%.
In the more sparsely populated areas north and west of Edinburgh and Glasgow, rental inflation is less dramatic, with North Ayrshire, Moray and the Highlands all registering rental growth below 5%.
Rental inflation slows down in England’s southern cities
Over the last 12 months, rental inflation has slowed down in southern England’s most expensive cities.
The largest moderation is happening in London, where rental inflation has decreased from 17% a year ago to 10.4% today.
The inner London boroughs were the first places to see rental inflation fall below 10%.
However, outer London areas such as Harrow, Barking and Dagenham and Redbridge continue to register rental growth above 13.5% - some of the highest increases in the UK.
The second and third largest slowdowns are recorded in Bristol and Brighton, where rental inflation fell to 8.8% and 6.0% respectively.
Rental inflation in the coastal communities of Hastings (6.7%), Newport (8.9%) and Blackpool (5.5%) is also more aligned with earnings growth (8.5%).
Those reductions show us that landlords are becoming more realistic in pricing their rentals, taking into consideration the cost-of-living struggles.
What are renters doing to minimise the impact of higher rents?
Faced with higher rents and a limited supply of homes on the market, renters are more commonly considering renting smaller homes, moving to cheaper areas or sharing properties with other renters to reduce costs.
Renters sharing does reduce the cost per person but it comes at the personal expense of privacy and space. Data from the Resolution Foundation found private renters have experienced a 16% reduction in floor space per person over the last 20 years.
What’s next for the rental market?
We expect rental inflation to remain above 9% for the rest of the year as earnings growth remains strong - and while higher mortgage rates are stopping many renters from moving into home ownership.
We currently anticipate national rental growth of 5-6% in 2024 - but rent increases in cities are likely to be higher.