Rent rises fail to keep up with inflation says leading agency

The average rent on a newly let home in Britain is £1,216 pcm in December, 7.7 per cent up on a year ago.

This means that the average tenant moving home will now be paying an extra £1,044 in rent each year according to figures released by lettings agency Hamptons.

However rental growth has cooled from its summer peak of 11.5 per cent in May 2022.

The agency says a lack of supply continues to fuel rents. While stock levels picked up a little from rock-bottom this time last year, there were still 41 per cent fewer homes available to rent across Britain than in late 2019.  

This, coupled with a six per cent increase in the number of tenants looking for a new home, has pushed rents up across the country.

For the second consecutive month, Scotland saw the biggest increase in rents of any region in Britain, with annual growth of 11 per cent on newly let properties.  Rental increases on existing tenancies in Scotland have been effectively banned since September, which means that landlords are increasingly relying on the open market to raise rents. 

Scotland also saw the biggest decline in the number of homes available to rent.  

There were 53 per cent fewer homes available to rent in December 2022 than in December 2019; meanwhile there were 38 per cent more would-be tenants looking for somewhere to rent.

Aneisha Beveridge, head of research at Hamptons, says: “2022 has been a record-breaking year for rental growth. But even so, rents have failed to keep pace with wider inflation, and indeed landlords’ rising costs.  

“With the cost of living crisis hitting tenants particularly hard, rental growth seems to have settled at a new pace, hovering around the seven per cent mark for the fifth consecutive month.

“While we may see the rate of growth soften a little more in the coming months, rents are still likely to rise around five per cent in 2023 given the lack of homes available to rent and inflationary pressures on landlords.”