The average UK rent for new lets has now reached £1,223, a +7.2% rise in the average UK rent over the last year.
This equates to UK renters paying an extra £960 per year (or £80 per month) compared to a year ago.
However, this rate of inflation is lower than we’ve seen at any time during the last two years. In 2023 alone, rental growth dropped from +11.4% to +8.2%.
Average rental prices in the UK: last 3 months
| February 2024 | January 2024 | December 2023 | |
|---|---|---|---|
| Average monthly rent in the UK | £1,123 | £1,220 | £1,216 |
Average rent by region
Average rents vary across the country, from a high of £2,121 per month in London to £695 per month in the North East.
The table shows current average rents for new lets across UK regions and how much they have changed in the last year.
Area Name | Average monthly rent | Change on a year ago (%) | Change on a year ago (£) |
London | £2,121 | 4.2% | £90 |
South East | £1,325 | 8.7% | £110 |
Eastern | £1,163 | 8.4% | £90 |
South West | £1,077 | 8.2% | £80 |
West Midlands | £905 | 7.9% | £70 |
Wales | £881 | 9.5% | £80 |
East Midlands | £860 | 8.7% | £70 |
North West | £848 | 9.0% | £70 |
Yorkshire and the Humber | £799 | 7.1% | £50 |
Scotland | £793 | 9.9% | £70 |
Northern Ireland | £735 | 2.6% | £20 |
North East | £695 | 9.9% | £60 |
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Rental inflation in Scotland falls to single digits
For the first time since May 2022, the rental inflation rate in Scotland has fallen below +10%.
This is driven by rents increasing at a slower rate in major urban centres: Edinburgh (+9.7%), Dundee (+8.7%), Glasgow (+8.0%) and Aberdeen (+6.0%).
Having said that, rental inflation is still ahead of the regional average in areas adjacent to Glasgow and Edinburgh, such as Midlothian (+13.8%), Renfrewshire (+12.5%) and East Dunbartonshire (+12.3%).
Back in September 2022, the Scottish Parliament introduced a rent cap of 3% on annual rises to existing tenancies.
While intended to reduce cost-of-living pressures for renters, it means rents have been set higher at the start of a tenancy to cover costs and limited increases during the contract.
This has led to Scotland having among the highest levels of annual rental inflation over the last year, and we still expect Scotland to see some of the fastest rent rises in the UK in 2024.
Southampton the only major city where rents are rising faster than a year ago
Slowing rental inflation is also providing some relief to renters in major UK cities, which are seeing smaller rent rises than rural areas.
Only Southampton is registering faster rent growth compared to a year ago, as the city continues to struggle with the supply of rental homes.
Major UK city | Average monthly rent | Change on a year ago (%) | Change on a year ago (£) |
Southampton | £1,121 | 10.2% | £100 |
Cardiff | £1,119 | 9.9% | £100 |
Edinburgh | £1,263 | 9.7% | £110 |
Manchester | £1,070 | 9.2% | £90 |
Birmingham | £934 | 8.2% | £70 |
Glasgow | £951 | 8.0% | £70 |
Bristol | £1,389 | 7.9% | £100 |
Nottingham | £947 | 6.9% | £60 |
Liverpool | £801 | 6.8% | £50 |
Sheffield | £809 | 6.8% | £50 |
Leeds | £969 | 6.3% | £60 |
London | £2,047 | 4.3% | £80 |
Belfast | £751 | 2.7% | £20 |
London rental inflation falls below the long-term average
Rental inflation has slowed down across southern cities in the last 12 months, giving some relief to renters in more expensive areas.
And slowing rental inflation is the most pronounced in London, the UK’s largest rental market.
The average monthly rent in London is now £2,121 - £90 higher than a year ago. This increase is higher than the UK average of £80 per month but is much lower than the £290 per month nationwide rise in the second half of 2022.
Rental inflation has slowed the most in Inner London. Rents for new lets are rising the most slowly in Westminster with a +1.3% or £40 per month increase.
This slowdown is a response to affordability challenges and lower demand for new lets in the centre of the capital. It suggests landlords are becoming more realistic in pricing their rentals and may be taking cost-of-living struggles into consideration when setting new rates, which tend to be exacerbated for those in the rental market.
However, outer London boroughs continue to register above-average inflation. This stretches to +12.9% in Havering, where the average annual rental bill is now £2,160 more expensive than a year ago.
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What factors influence rental prices?
One of the most important factors that influences rental prices is the level of demand from renters versus supply of rental properties.
A chronic mismatch between supply and demand has been the defining feature of the UK rental market for the last three years. It’s the main reason rental inflation was so sharp during that time.
Rental growth is also impacted by earnings growth - a strong jobs market and subsequent wage rises keeps demand high and means tenants can weather rent increases.
In the last year, higher mortgage rates have also impacted rents as they’ve prevented more would-be first-time buyers from owning a home and boosted demand for rental homes.
The cheapest places to rent a home in the UK
What are renters doing to minimise the impact of higher rents?
Some renters have escaped the steepest rises by staying in their existing homes.
Year-on-year rises for established tenancies rose at the slower rate according to the Index of Rental Prices from the Office for National Statistics.
When renters move and are faced with higher rents and a limited supply of homes on the market, they're more commonly considering renting smaller homes, moving to cheaper areas or house-sharing to reduce costs.
House-sharing reduces the cost of housing per person but it comes at the personal expense of privacy and space. Data from the Resolution Foundation found private renters have experienced a -16% reduction in floor space per person over the last 20 years.
What’s next for the rental market?
We believe that the rental market is now past peak rental growth after starting to cool in the final months of 2023.
We project that UK rental inflation will fall to +5% in 2024, but affordability will not improve as earnings growth is also expected to slow.
Continually low levels of net-new investment in rental properties means supply will remain below average, supporting rent rises. However, slower increases will be welcome news to renters who have faced steep hikes in the last two years.
Head to our latest Rental Market Report for more insight on the rental market.
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