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Rents fall in real terms

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Rents in the private sector rose at an annual rate of 1.2 per cent in the 12 months to June 2021, a rate unchanged from April.

This is the conclusions of the latest Index of Private Housing Rental Prices from the Office of National Statistics; ‘an experimental price index tracking the prices paid for renting property from private landlords in the UK.

Rents went up by 1.1 per cent in England, 1.5 per cent in Wales and 1.2 per cent in Scotland in the 12 months to June 2021.

The East Midlands and West Midlands saw the highest annual growth in private rents (both 2.4 per cent), while London saw a decline of 0.1 per cent.

London rent increases have been slowing since November 2020. Now actually declining, the annual rate of (no) increase is now the lowest of any English region, said the ONS. ‘This reflects both a decrease in demand, such as remote working shifting housing preferences meaning workers no longer need to be close to their offices, and an increase in supply, such as an excess supply of rental properties as short-term lets change to long-term lets.

The 1.2 per cent rate of increase in fact means rents are falling across the country in real terms,  the National Residential Landlords Association was quick to point out.

‘This increase remains well below all measurements of inflation with the smallest increase, CPI including housing costs, being 2.4 per cent’, it said.

‘The real terms fall in rents comes despite concerns about the demand for rental housing outstripping supply’.

The figures ‘burst the myth’ that landlords are hiking rents by as much as possible and demonstrate that market forces are the biggest influence on rent levels, said NRLA chief executive Ben Beale. ‘It is clear also that the trend of renters moving out of the capital in response to the pandemic continues.

‘That said, demand for privately rent homes continues to outstrip supply and without further efforts to meet that demand, rents will continue to rise. The Government needs a strategy that properly recognises the importance of a thriving private rented sector in which tenants have genuine choices over where they rent’.

  • ‘Private rents are an increasingly important component of the UK housing market. Approximately a quarter of all UK dwellingsare now occupied by private renters’, said Chris Jenkins of the ONS. ‘There is an increasing need for policy-makers, landlords and tenants to better understand the sector, particularly at a more local level where there can often be significant differences in how the rental market is performing’.

The intended new statistics will comprise:

  1. A monthly publication covering the UK, Wales, Scotland, Northern Ireland, the English regions, and local authorities;
  2. An index of private rental price growth over time;
  3. Annual percentage change in price over time;
  4. The average private rental price over time; and
  5. A breakdown of private rental price by geography and bedroom category (studio, one bedroom, two bedrooms, three bedrooms, and four or more bedrooms).