2023 was another tough year for renters, with average rents for new lets reaching £1,200 in November - 9% higher than a year ago.
It means renters have seen an extra £1,200 - or a month’s worth of rent - added to their annual bill.
The table shows how much rents for new lets have increased across the UK in the last year.
| Region | Annual rental increase (%) | Annual rental increase (£) | Average monthly rent |
|---|---|---|---|
| Scotland | 12.1% | £84 | £780 |
| North West | 10.8% | £81 | £831 |
| Wales | 10.1% | £78 | £852 |
| North East | 9.7% | £60 | £672 |
| East Midlands | 9.7% | £75 | £846 |
| East of England | 9.5% | £99 | £1,145 |
| South East | 9.3% | £110 | £1,294 |
| West Midlands | 8.8% | £72 | £883 |
| South West | 8.6% | £83 | £1,061 |
| London | 8.0% | £157 | £2,128 |
| Yorkshire | 7.7% | £56 | £782 |
| Northern Ireland | 4.9% | £35 | £750 |
Rental inflation in Scotland boosted by rent controls
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 landlords are now going higher at the start of a tenancy to cover their costs and the limited increases during the contract.
In fact, Scotland has registered the highest level of annual rental inflation in the UK at +12.1%. The average monthly rent in Scotland stands at £780, £84 more than a year ago.
This is a slower rate of growth than the highs of +13.7% back in February 2023, but we still expect Scotland to see faster rental growth than anywhere else in the UK in 2024.
In turn, Scottish cities continue to register some of the largest rent increases in the country. Over the last 12 months, the average monthly rent in Edinburgh increased by £150 and in Glasgow by £100.
Rental inflation is much less dramatic in rural parts of Scotland, with Ayrshire, Moray and the Highlands all recording growth below +7%.
London leads the slowdown in rental growth
Rental inflation has slowed down in southern cities in the last 12 months, giving some relief to renters in the expensive South of England.
The largest moderation is in London, where rental inflation has dropped from +15.9% a year ago to +8.1% today.
Rental growth has slowed the most in Inner London boroughs. A year ago, we were seeing rises of +14.9% in Hammersmith and Fulham and up to +21.1% in Tower Hamlets. Today, no inner borough is seeing growth of more than +9.5%.
However, outer boroughs are a different story, seeing some of the highest rent increases in England right now. Rents have risen by more than +13.5% in boroughs like Hillingdon, Redbridge and Barking and Dagenham.
The second and third largest slowdowns are recorded in Bristol and Newport, where rental inflation has fallen to +7.9% and +8.8% respectively.
These reductions suggest 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.
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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 of 6.2% 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 expect a further slowdown in rental growth in 2024 as worsening affordability keeps demand in check and supply improves slowly. There are already signs asking rents have overshot in some markets that are showing resistance to higher rents.
Slower increases will be welcome news to renters who have often faced steep hikes in the last two years.
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