ONS produces first rental indices (minus the rents)

The Office for National Statistics has produced its first private rental price indices.

However, unlike the house sales index, the ONS already produces each month, the rental version – despite its title – contains no actual prices. Instead, it contents itself with a series of percentages.

The ONS’s Index of Private Housing Rental Prices (IPHRP) is also described as “experimental” and a health warning recommends that caution be exercised when drawing conclusions from the data, as the index is likely to be developed further.

The first index, published yesterday, says that between May 2012 and May 2013, private rental prices in Great Britain rose by 1.3%. Private rents in Britain excluding London rose by 0.8% in the same period.

In the same period, private rental prices grew by 1.3% in England, 1.0% in Scotland and 1.5% in Wales.

Rents increased in eight of the nine English regions in the year. The largest private rental price increases were in London at 2.2% and the South-East at 1.2%. Rents decreased by 0.1% in the North-East.

Over the eight years between May 2005 and May 2013, says the index, private rental prices increased by 8.4% in England. During this period private rental prices increased the most in London (11.0%) and the East (8.3%), and the least in the North-East (5.2%) and the East Midlands (5.3%).

When we queried the absence of actual rent figures from the index, a spokesperson said: “We are not publishing average rental prices or rental price levels. The index covers the change in the level of rents, the same way that other inflation measures cover the change in the prices of goods.

“For some areas you will be able to find the prices through other sources, such as Valuation Office Agency’s housing market statistics, which provide average rental prices for England.”

According to the Valuation Office Agency, reporting in March, national average rents are £724.
 
The British Property Federation said the ONS data should put an end to myths around rents, which are regularly claimed to be rising far above inflation.

It said the data showed that rent inflation has not only undershot inflation over the past year, but also over the past eight years.

Ian Fletcher, Director of Policy at the British Property Federation, said: “For too long we have lacked a decent official statistic on rental growth, and as a result that void has been filled by all manner of surveys and commentators all too prepared to paint a false picture of what is happening to rents in the private rented sector.

“This index is therefore welcome and though experimental, hopefully will become an established part of our national statistics and provide the insight we have lacked.

“What is clear is that rents in the private rented sector have not risen at anything like the rate that some people would like to portray. Private rents do not rise at the rate that is often perceived because most landlords do not raise rents every calendar year, but only when a tenant moves on, which is typically every 20 months or so.

“There is also a view amongst some commentators that frothy rents in a few postcodes in London are somehow indicative of the country as a whole.”