The ONS released its Index of Private Housing Rental Prices for June 2023 an it showed that rents had risen by over 5% in the last 12 months.

On Twitter, Aimee North, Head of Housing Market Indices at the ONS, commented, “There was another record annual increase for UK rents in the latest month. London rental prices rose steeply to their highest annual rate since records began in 2006. The lowest annual inflation was in the North East.”

Summary

1. Overall UK Rental Growth:

• In the past year up to July 2023, the price of renting a home in the UK rose by 5.3%. This is a slight increase from 5.2% the previous month.
• This 5.3% rise is the highest ever since these records began in 2006.

2. Breakdown by Country:

• England: Rental prices rose by 5.2%. If we don’t count London, it’s still a 5.1% rise.
• Wales: The biggest jump here! Rents grew by a whopping 6.5%, largely due to a sharp monthly increase in July 2023.
• Scotland: Rental growth was 5.7%. But, there’s a twist! A local bill has limited how much landlords can increase rent for existing tenants, but there’s no cap for new rentals.
• Northern Ireland: They’ve seen a massive 9.2% jump in rental prices up to May 2023. However, this rate is a bit outdated and will get updated soon.

3. Regional Insights in England:

• West Midlands, Yorkshire, Humber, & London all saw the highest growth in England at 5.5%.
• London: It’s noteworthy because this rate is the highest since they started keeping records in 2006. About a third of all UK rental spending happens in London.
• North East: Here, the growth was a bit more modest at 4.6%.

4. Supply & Demand Play:

• More people are looking to rent, with a significant rise in the demand for rentals in the last quarter. On the flip side, fewer landlords are putting properties up for rent. Basic economics tells us that high demand + low supply = higher prices. So, rents are expected to continue rising in the coming months.

5. A Few Technical Notes:

• The data mentioned has some experimental classifications. This means while the data is valuable, it might undergo some revisions later.
• For Scotland, much of the data is based on new rental prices, which aren’t affected by the rental price cap. So, when comparing Scotland’s data with other UK countries, remember that a large portion of it is based on these uncapped new rentals.

Key Takeaway

If you’re considering property investment, the UK rental market is showing strong growth, especially in specific regions and countries. However, keeping an eye on local regulations (like Scotland’s rental cap) and understanding demand-supply dynamics will be key to making an informed investment decision.