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February 6, 2024Over the past nine months, rent increases in the UK have been outpacing inflation, according to data from Hamptons.
In December, the average rent for a newly let property rose by 10.2% compared to the previous year, surpassing the previous record set in December 2022.
Rental growth has been consistently faster than inflation since March 2023, with an average monthly outpacing of 3.5%. This trend has reversed the previous pattern where rental growth was 1.1% higher than inflation each year.
Although rental growth has slightly cooled from its peak in August, it continues to outpace inflation, with no signs of significant slowing in the near future.
The rise in rents can be attributed to higher landlord costs and a shortage of available rental properties, which is not expected to change significantly in the short term.
The East of England experienced the largest rent hikes, with the average rent for a newly let property reaching £1,299 per month in December, an increase of 13.3% compared to the previous year.
While mortgage rates are expected to decrease, alleviating some pressure on rents, the demand for rental properties is likely to remain high.
Lower rates may also enable more renters to become homeowners, reducing rental demand. However, rents are still projected to rise faster than the pre-Covid average of 2.6% over the next few years, with Hamptons forecasting a 7% increase in 2024, followed by 5% increases in both 2025 and 2026.