Rental costs increase by 2.4% across Britain year-on-year

Rental costs increase by 2.4% across Britain year-on-year

With the popularity of the private rented sector across Britain continuing to rise, the cost of renting has increased by 2.4% since June 2015.

Summary:

  • The cost of renting in Britain increased by 2.4% year-on-year, with every region in England registering a rise
  • Residential house price growth has been stronger than rental prices for several years, at 5.9% and 2.1% respectively
  • Rental costs continue to outpace real wages, with a sustained lack of supply putting upwards pressure on prices

The cost of living in the UK private rented sector increased by 2.4% year-on-year to the month of June 2016.

Rents increased by 2.5% in England and by 0.1% in Scotland but fell by 0.1% in Wales, according to the data from the Office of National Statistics (ONS).

Rental prices increased in all the English regions over the year to June 2016, and the index report revealed that since January 2011 rental prices in England have increased more than those of Wales and Scotland.

The annual rate of change in Wales continues to be well below that of England and the Great Britain average.

Residential house price growth has typically been stronger than rental price growth for a number of years, with an average 12-month rate of house price inflation between January 2013 and May 2016 of 5.9%, compared with 2.1% for rental prices.

The report suggests that inflation in the rental market is likely to have been caused by demand in the market outpacing supply. The Royal Institute of Chartered Surveyors (RICS) reported an increase in demand in June in their residential market survey.

Compounding the lack of supply in the market, RICS also reported that new landlord instructions fell slightly in June. The ARLA also reports that the supply of rental stock fell in May 2016 and was lower than twelve months previously.

While pay grew by 2.2% in the three months to May 2016 compared with the same period last year, rental prices have continued to grow at a slightly faster rate than real wages in recent months.

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