Average UK rents increased again during Q4 2022, according to The Deposit Protection Service (The DPS).
The UK’s largest protector of deposits’ quarterly Rent Index reveals how average rents in Q4 2022 were £903: an increase of 1.57% (£14) since the previous quarter and 8.27% (£69) since the last quarter of 2021.
The report also highlights how rent increases in London and Scotland outstripped the Consumer Prices Index (CPI) 9.20% annual rate of inflation, with the average in the capital increasing by 11.59% (£160) from £1,381 to £1,541 between Q4 2021 and Q4 2022 and costs increasing by 12.02% (£79) from £657 to £736 during the same period north of the border.
Average annual UK rent is now £1,332 higher than the same time two years ago – a rate of increase of £111 (14.02%) a month according to the report, which is based on one of the most comprehensive databases of domestic private rental prices across the country.
Matt Trevett, Managing Director at The DPS said: “The UK’s sustained rent rises are a result of a complex combination of inflationary pressures due to demand for housing.
“Higher interest rates may also be preventing those tenants who are looking to buy their own property from meeting mortgage affordability criteria, which means they must continue to stay in the private rental sector (PRS).
“Higher building material costs may also be affecting the pace and price of the construction of new homes, which is also squeezing the supply of properties for rent or purchase.”
Paul Fryers, Managing Director at Zephyr Homeloans, said: “Whilst mortgage interest rates for buy-to-let properties have stabilised during the past few months, landlords must now meet stricter affordability tests.
“As a result, landlords are under pressure to increase rents to ensure they have sufficient funds.
“Landlords who want to exercise forbearance for their tenants during the present time may find themselves prioritising their mortgage-related obligations.”
Rents in Yorkshire saw the slowest annual growth between Q4 2021 and Q4 2022, up £32 (5.50%) from £582 to £614, said the organisation.
The DPS added that rents in the South East increased by £53 (5.52%) from £961 to £1,014 during the same period.
Rents in these regions still grew faster than the national average 5.30% annual rent rise during 2021, the organisation added.