London driving UK rental growth with 'staggering' increases

Posted on Wednesday, May 15, 2024

The capital's landlords are benefitting from double-digit increases in rents, outdoing every other region of Great Britain. 

London rents increased by 11.2% between March 2023 and 2024, rising from £1,848 to £2,055, analysis from London lettings and estate agent, Benham and Reeves, has found.

Benham and Reeves analysed the latest rental market data from the Office for National Statistics looking at the annual change in the average monthly rent across each region of Britain, as well as at the local authority level.

The research shows that across Britain as a whole, the average cost of renting has risen by 9.1%, reaching £1,246 as of March 2024.

London tops the table at a regional level, having seen rents increase by 11.2% year on year. Scotland was the only other area of Britain to see double-digit rental growth over the last year at 10.5%.

When analysing the market at the local authority level Benham and Reeves found that Brent has the highest rental growth in the UK. The London borough has seen the cost of renting rise by a staggering 27% in a single year, pushing rents to £1,940 per month, up from £1,527 in 2023.

London also accounts for a further two of the top 10 rental hotspots in Britain, with Greenwich (15.8%) and Islington (14.2%) also seeing steep increases.

Outside of London, Folkestone and Hythe have seen the second largest increase in rental values across Britain, up by 22.5% annually, Birmingham sits in seventh place with an increase of 14%, and Oldham (13.9%) and Ipswich (13.3%) rank ninth and tenth respectively.

However, the rest of the top 10 is comprised of three Scottish locations - Lothian (15.7%), West Dunbartonshire (14.4%) and Argyll and Bute (14.0%).

In Scotland, the government prohibited rent increases between September 2022 and April 2023, after which rent increases were capped at 3% in most cases until the end of March 2024, when the cap expired. It’s unclear whether rent controls will be reintroduced, though it’s thought the policy has actually served to increase rents.

Landlords are said to have departed from the sector due to perceived hostility from the Scottish government, squeezing supply in the face of high demand, while others introduced steep increases on new tenancies in a bid to mitigate the impact of a potential rent cap.

Director of Benham and Reeves, Marc von Grundherr, commented: “The allure of London is as strong as ever and that’s being seen on the ground, as properties are being let a matter of hours after being listed.

“Demand is especially fierce in Brent, Greenwich and Islington, where rental properties are commanding considerably stronger rents than they were just a year ago, which will bring some positive news to landlords despite the challenges of dealing with higher mortgage rates and energy costs.

"We're seeing some huge increases in rents of late, some to the tune of 45%, but this high rental growth isn’t just confined to the capital. There’s been strong increases across every region, but especially Scotland.

“So while some landlords may have chosen to exit the sector, the high tenant demand for rental properties has only served to make renting out properties more profitable for those sticking it out.”

Via @PropertyReporter