UK Rental Inflation Remains In Double-Digit

UK home rents continued to register double-digit growth as rental supply remained low, the property website Zoopla said in its September Rental Market Report, released Thursday.

Rents for new lets increased 10.5 percent in July from a year ago, slower than the 12.2 percent rise in the previous month. Rental inflation has been in double-digit for 18 months, Zoopla said.

Data showed that over the last three years, average rental cost of tenants rose by GBP 2,800.

Zoopla’s Executive Director Richard Donnell said the rented sector remained stuck in a period of low supply and high demand.

Donnell noted that growing rental supply is the most efficient way to curb rental growth. However, rising borrowing costs weighed on new investment.

On demand side, Donnell observed that record levels of immigration and strength of the labor market increased the number of renters chasing each property over the summer 2022. Although demand increased again this year, it was 20 percent lower than a year ago.

As rents continue to outpace earnings, rental affordability hit the worst for over a decade at 28.4 percent.

The affordability of renting will have a major impact on rental growth over the coming months.

For 2023, Zoopla forecast rents for new lets to rise by 9 percent before slowing to 5-6 percent in 2024.

Rentals increased across the UK in July. Scotland overtook London with the steepest rise in rental inflation.

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