Average rents paid by private tenants increased by 2.3% in the 12 months to August 2016, as demand for rental housing continued to outstrip the supply of homes on the market, the latest figures from the Office of National Statistics (ONS) show.
Last month’s data, which actually represents a 0.1% fall compared with the 2.4% annual rental price growth recorded in July, shows that rents increased by an average of 2.4% in England, 0.1% in Wales and remained the same in Scotland.
There were rises in all regions in England with the South East recording the biggest rent hike of 3.4%, followed by 3.3% growth in the East of England and a 2.6% rise in London.
The lowest annual rental price increases were recorded in the North East at 0.9%, unchanged from July, followed by just 1.1% growth in the North West and a 1.3% increase in Yorkshire and the Humber.
Reflecting on the latest ONS Index of Private Housing Rental Prices, Steve Bolton, founder of Platinum Property Partners, commented: “The surge in buy-to-let property purchases following April’s stamp duty changes fails to have any discernible effect on the cost of renting, and this trend isn’t likely to reverse any time soon, particularly as legislation planned for 2017 threatens to reduce rental stock and push prices even higher.
“The reduction of buy-to-let mortgage interest tax relief will make some landlords unprofitable, forcing them to pass on costs to tenants in the form of higher rents just to stay afloat. Even those who can still operate may be deterred from making further investments, reducing rental stock at a time of severe property shortage.
“Although depicted as the undesirable alternative to homeownership, rental accommodation is a service valued by many – particularly young professionals looking for flexible accommodation or those not ready to commit to the property ladder just yet. However, it’s important that tenants are not prevented from saving for the future by excessive rental prices.”