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Rental Property Market Growth Stabilises Across UK But Falls in London

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    Average Rent in Great Britain Increases Annually by 6.3%

    Hamptons’ latest research on the UK rental market has revealed that rental inflation has stabilised, showing steady annual growth over the past few months.

    They found that the monthly average rent of a newly let home in Great Britain stood at £1337 in May. This is an annual increase of 6.3% the third month in a row when yearly increases average about 6%.

    However, the average rents for tenants renewing their contracts are hitting bigger year-on-year increases, with the May figure showing an 8.8% increase, up from 8.3% in April.

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    London is Only Region Where Rent Has Fallen YoY

    The slowdown in rental growth compared to last year’s high growth figures has been mostly led by London. Annual growth in Greater London fell to 3.9% in May, the lowest rate since November 2021. Inner London was the only area that experienced a fall in annual growth, with negative growth of -2.3% for the second consecutive month.

    Hamptons also found growing competition for more affordable rental properties among tenants in Britain, which is driving the price of newly let one-bedroom homes up. For the first time in 11 months, rents for one-bedrooms (7.6%) climbed faster than for two-bedrooms (6.2%).

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      Renting Found to be Cheaper Than Buying with a Small Deposit

      Hamptons’ research also shows that renting is still more cost-effective than buying property for most households in Great Britain. High mortgage rates have pressured buyers with small deposits out of the market, causing them to rent longer term.

      Hamptons found that, on average, those who have saved a 5% deposit will pay £300 more a month on mortgage repayments than those who continue to rent.

      However, there is a stark difference when breaking down the figures at a regional level. In South England, affordability is most stretched, and London, in particular, is a salient example. The average London tenant will be paying an extra £775 per month in mortgage repayments compared to if they stay in the rental market. According to Hamptons and The Property Association a mortgage rate of 3.6% would equalise the cost of renting and buying every month in the capital.

      However, in North England and Scotland, the difference is less marked, at under £100 more per month, when getting a mortgage with a small deposit compared to renting.

      Find out more about the UK property market with our latest buy-to-let guides, covering topics such as available investment property in Salford and available investment property in Wembley.

      The latest UK interest rates chart is available to read!

      Rental Property Market Growth Stabilises Across UK But Falls in London

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      Jessica Ferris

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      Jessica Ferris is a property writer at RWinvest, helping our readers stay ahead of property market trends with the latest news and statistics.