The average rent for a new tenancy has increased by 10.3% since September 2022, with renters now paying £1,164 per month on average.
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Residential rents for new tenancies are 10.3% higher than in September 2022
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Rents have increased the most in Scotland, where new rent controls are encouraging landlords to secure higher rents at the start of a tenancy
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More cities have breached the £1,000 average rent mark – new additions include Cardiff, Southampton and York
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Average rent in Manchester is on track to reach £1,000 by the end of 2023
An ongoing supply-demand imbalance continues to push rents higher, despite demand for rental properties peaking earlier than usual this summer.
Over the last year, the average rent for a new tenancy has increased by 10.3% to stand at £1,164 per month.
The average annual rental bill is now £1,320 higher than a year ago at nearly £13,970 a year, compared to £12,670 last September.
This marks the 19th consecutive month of our index reporting a rental inflation of over 10%.
Rental growth for renters staying in their existing home is much lower at 5.5%, according to the Index of Rental Prices from the Office for National Statistics.
Rental inflation in Scotland boosted by rent controls
Scotland is registering the highest level of rental inflation in the UK at 12.8%.
Landlords in Scotland are maximising rents for new tenancies to cover increased costs and allow for the fact that future rent increases will be limited over the life of the tenancy.
The average rent in Scotland is now £750 per month, which is £90 higher than a year ago.
Rental inflation in Scotland has now started to moderate from 13.7% six months ago, but we expect the above-average rental inflation to continue.
Rents are growing at the fastest rate in the cities of Edinburgh (16.3%), Dundee (14.6%) and Glasgow (13.6%). Renters looking for new lets in areas neighbouring Edinburgh and Glasgow are also seeing double-digit increases compared to August 2022.
Cardiff, Southampton and York are now £1,000 rent cities
The number of cities in which renters pay more than £1,000 per month on average when they start a new tenancy is growing.
In 2023, new additions to this group were Southampton and York, where it now costs £1,057 and £1,045 per month to rent a home.
The latest place to join the club is Cardiff, where average rents increased by 11.2% over last year to reach £1,012.
High rents in London makes renting expensive, pushing demand into more affordable areas. This boost in demand in commuter areas in the South East has led to an increase in the number of commutable towns with average rents exceeding £1,000.
Here are the towns and cities where average rents on new lets have just breached £1,000 per month.
Manchester next in line to become a city with £1,000 average rent
Manchester is in the top 5 for cities recording the highest rates of rental growth.
Average rents in the city are £996 per month, making it the most expensive city to rent in northern England. We can expect average rent to increase to £1,000 by the end of this year.
Central Manchester, Trafford and Salford already have average rents in excess of £1,000.
Higher rents in these central Manchester areas are likely to turn value-seeking renters towards neighbouring areas such as Bolton, Oldham or Rochdale. This will boost demand and is likely to lead to rental growth in those areas as well.
What are renters doing to minimise the impact of higher rents?
Faced with higher rents and limited supply of homes on the market, renters are more commonly considering renting smaller homes, moving to cheaper areas or sharing a property with other renters to reduce costs.
House sharing reduces the cost per renter but 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 expect rental inflation to remain above 9% for the rest of the year, as earnings growth remains strong while high mortgage rates stop many renters from moving into home ownership.
We anticipate national rental growth of 5% to 6% in 2024. Cities are likely to continue registering rental inflation above this level.
