Recent analyses indicate that UK residential rents are already rising at an accelerated pace following the Labour budget of October 30th. The Office for National Statistics (ONS) reported that average UK private rents increased by 8.7% in the 12 months to October 2024, up from 8.4% in September 2024.
This surge is particularly pronounced in London, where rents have reached record highs, averaging approximately £2,200 per month. The annual rent inflation in the capital climbed to 10.4% in October, up from 9.8% in September.
Several factors contribute to this trend:
- Supply Constraints: A decline in landlord instructions has led to a reduced number of properties available for rent. The Royal Institution of Chartered Surveyors (RICS) noted that landlord instructions fell to a net balance of minus 29% in the three months leading to October, the lowest since 2021.
- Increased Demand: Despite rising rents, tenant demand remains robust, with a net balance of 19% reported by RICS, indicating strong interest in rental properties.
- Economic Policies: The recent budget introduced measures such as increased stamp duty for buy-to-let properties, which will act as a barrier to new entrants to the market. This will be especially pronounced in the South East where the average house price is £466,000.
The Times and Financial Times have both reported on the issue over the last week. they note how rents are now expected to grow faster than wages at almost 20% over the next five years.
