Rents across the UK are rising at more than 14 times the rate of inflation, though the pace of growth is slowing. HomeLet, an insurance firm for the rental sector, said private rents grew by 4.4% over the year in the three months to May 2016 in the UK, excluding London. The average private rent reached £771 a month.
That is slower than the 5.1% reading in the previous month and 7.6% in May 2015. But it remains much quicker than the 0.3% consumer price inflation in April 2016, according to the Office for National Statistics (ONS). Moreover, pay is increasing at a rate of around 2%, putting extra strain on renters' finances.
Rents are rising fast amid a shortage of rental property in some parts of the country, particularly urban centres such as London.
HomeLet's index said the average London rent grew 6.2% annually in the quarter to the end of May, hitting £1,563 a month. But rents are increasing quickest in Scotland, where there was a 10.6% increase in the average over the same period to £721 a month.
|Region||Average rent for the three months to May 2016 (£)||Average rent for the three months to May 2015 (£)||Annual change (%)|
|Yorks & Humber||634||591||7.3|
|UK ex Greater London||771||738||4.4|
Martin Totty, chief executive of Barbon Insurance Group, which owns HomeLet, said the rush of buy-to-let investors to purchase property before the new tax year in April, and so beat a stamp duty hike, may have increased the supply of rental homes, moderating rent rises.
Totty said May's index shows "a rental market characterised by steady growth in rents, as the number of tenants looking for property runs ahead of the supply in the market – that remains the picture in most regions of the country. While this growth has begun to slow, which tenants will welcome, landlords will also be encouraged by the vote of confidence in the sector evidenced by the increase in buy-to-let completions in the past few months."