PRS rents hit new record high as landlords flee market

Private rents in the UK continue to rise quickly with data from the Office for National Statistics (ONS) revealing an 8.4% increase in the year to September.

While September's figure is unchanged from August, Rightmove also revealed its rent price index to show rents have hit a new record.

According to the ONS, average private rents across Great Britain now stand at £1,336, up from £1,233 a year ago.

England's highest rent inflation was in London at 9.8% and the lowest was for tenants in the South West and Yorkshire and the Humber at 6.3%.

In Wales, rents increased £760 (8.3%), and by £973 (7.2%) in Scotland.

In Northern Ireland, rents grew by 9.5% to July.

Landlords exit the market

Sarah Coles, the head of personal finance at Hargreaves Lansdown, warns that the situation is likely to worsen as more landlords exit the market.

She explains: "Given the continued exodus of landlords, renters face the double misery of fighting over the scraps and then paying a fortune for them.

"There's nothing new in the trend for landlords to leave the market, but the Budget has created a new impetus.

"Fears of changes to capital gains tax in the Budget are driving plenty of sales."

Ms Coles added: "Life isn't set to get any easier for landlords, so the steady stream of those leaving the market is likely to continue, and rents may well keep rising."

'Too many good landlords are leaving'

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: "Unfortunately, too many good landlords are leaving the sector in response to concerns about increasing tax and regulatory issues.

"Prospects of an improvement in choice and substantial softening in rents therefore seems unlikely for the time being at least."

Harriet Scanlan, the lettings manager at estate agency Antony Roberts, said: "There is more choice of rental property for tenants with an increase in stock coming to market.

"The supply and demand balance still swings in favour of the landlord, but tenants are now afforded more choice."

She adds: "We are seeing a strong steady flow of applicants looking to rent, which means landlords are enjoying little-to-no void periods.

"Landlords are still achieving slightly higher rents year on year when reletting property to the same tenants, but not as steep as the increase in 2022/23."

Rents outside London reaching a new high

Rightmove's rent price index underlines the ONS data with average advertised rents outside London reaching a new high for the 19th consecutive quarter.

It says that rents are hitting £1,344 per month.

While this marks a 5.2% increase from last year, it's the slowest rate of growth since 2021.

In London, rents also set a record at £2,694.

Rented housing supply

Despite these rising prices, the balance between rented housing supply and demand is improving, the platform says.

The number of inquiries per rental property has fallen from 23 to 15, although it's still nearly double the pre-pandemic level of eight.

The availability of rental properties has also increased by 13% year-on-year but remains 27% below 2019 levels.

To attract tenants, landlords are now more willing to offer discounts on advertised rent prices, Rightmove claims.

More than a fifth of rental properties are currently being advertised at a lower price than initially listed.

Some landlords choosing to exit

Rightmove's director of property science, Tim Bannister, said: "While we're seeing some signs of improvement in the market's chronic levels of demand and supply imbalance helped by a slight increase in the number of available rental properties, affordability remains a key challenge for renters as prices continue to hit new records.

"Tenant competition has eased slightly from last year, but the market is still far from balanced."

He added: "We are seeing some landlords choosing to exit the market with potential tax changes and stricter EPC regulations as additional factors in landlords' decision-making.

"With rental supply under strain, incentivising landlords to invest in energy-efficient upgrades or offering tax relief could help maintain rental supply and, ultimately, ease affordability pressures for tenants."

Big rent increases

Simon Thompson, the managing director of Accommodation for Students, said: "The ONS says rents have plateaued while Rightmove says they have hit a new high.

"What's important is tenant affordability so it looks like big rent increases in the coming months won't be happening."

He adds: "Though with the drop in supply, a rise in tenant demand and landlords watching the progress of the Renters' Rights Bill, anything could happen.

"All landlords will need to monitor the market and potentially move their rents to the market rates for when the Bill becomes law."