British rental costs up 2.5% year-on-year

British rental costs up 2.5% year-on-year

With the demand for private rented sector properties continuing to outpace supply, rental costs have increased for the sixth year in a row.

Summary:

  • Rental costs in the UK have risen by 2.5% year-on-year to May, with demand in the lettings market continuing to increase
  • The UK private rented sector has seen rental costs increase every year since 2010, with annual increases up to 3% year-on-year
  • Supply has failed to keep up with rental demand for 30 consecutive months

Rents in Britain increased by 2.5% in the 12 months to May, new data from the Office of National Statistics shows.

Rental prices grew by 2.6% in England, 0.4 % in Scotland and were unchanged in Wales. A property that was rented for £500 a month in May 2015, and saw its rent increase by the Great Britain average rate, would now be on the market for £512.50 a month in May 2016.

Since January 2011, England rental prices have increased more than those of Wales and Scotland, with English rental prices have shown annual increases ranging between 1.4% and 3% year-on-year since 2012, with May 2016 rental prices being 2.6% higher than May 2015.

Inflation in the rental market is likely to have been caused by demand in the market outpacing supply. Demand in the lettings market continues to strengthen, with RICS’ Residential Market Survey noting that tenant demand continued to grow robustly in May 2016.

Demand in the lettings market has outstripped supply for 30 consecutive months, the latest RICS survey found. The Association of Residential Letting Agents (ARLA) also reported that supply in April 2016 fell compared with April 2015.

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