Average UK private rents have risen by 8.7% in the 12 months to May 2024 (provisional estimate), down from 8.9% in the 12 months to April, revealed the latest ONS data.
According to ONS, average rents increased to £1,301 (8.6%) in England, £736 (8.5%) in Wales, and £957 (9.3%) in Scotland, in the 12 months to May.
In Northern Ireland, average rents increased by 10.3% in the 12 months to March 2024.
In England, rent inflation was highest in London (10.1%) and lowest in the North East (6.1%).
Overall, the highest rent registered in May was in Kensington and Chelsea — reaching £3,397 — while the lowest rent of £480 was recorded in Dumfries and Galloway.
The latest ONS data has also revealed that average UK house prices increased by 1.1% in the 12 months to April, up from 0.9% in March.
In addition, the CPI dropped to 2% in May — reaching the government’s inflation target — while the CPIH fell to 2.8%.
Richard Rowntree, managing director for mortgages at Paragon Bank:
“It is encouraging to see a reduction in rental inflation, which we believe will be driven by lower inflation on new lets.
“In order for this trend to continue, something that helps to alleviate the affordability challenges faced by tenants, it is crucial that we address the imbalance between the demand and supply of rented homes.
“To do this we need to recognise the contribution of private rented sector landlords and be proactive in creating the conditions that facilitate investment in good quality housing.”
Harps Garcha, director at Brooklyns Financial:
“This latest data shows the property market hasn't imploded as many predicted. Wednesday's inflation news will provide further relief to the property market.
“It gives the Bank of England the green light to consider reducing interest rates, though immediate changes are unlikely.
“Inflation finally arriving at target is likely to lead to a reduction in swap rates, which will have a positive impact on mortgage rates, providing a much-needed boost to the housing market.
“While the rental market has already suffered, the reduction in mortgage rates may help slow the rise in rents — however, a longer-term strategy is essential to encourage private landlords back into the market and ensure a balanced and stable housing sector.”
Dariusz Karpowicz, director at Albion Financial Advice:
“If the Bank of England does decide to cut rates soon, it could boost confidence in the property market.
“Lower interest rates would make mortgages more affordable, potentially driving up demand for houses and stabilising or even increasing house prices.
“For renters, lower mortgage rates might encourage landlords to hold onto their properties rather than selling, which could help stabilise rent prices.
“The second half of 2024 could be better than the first, with a possible rate cut improving sentiment and increasing activity in the property market.
“Today's inflation data is a positive sign, and if it leads to a rate cut, we could see a more dynamic property market in the coming months.”
Ken James, director at Contractor Mortgage Services:
“While the inflation data may cause some renters to reassess their options, many may view the current market conditions as still too wild and unpredictable and will prefer to see stability settle back before making that jump.
“I believe we will see a marked improvement in the second half of this year for the mortgage market, as there seems to be fewer reasons for the Bank of England MPC to keep rates at 5.25%.
“A rate cut will be the injection of caffeine the market needs.”
