May 21, 2024 2:46 pm

Insert Lead Generation
Nikka Sulton

Landlords in London are experiencing significant rent increases, outpacing all other regions in Great Britain. This trend highlights the capital’s strong rental market and its appeal to both domestic and international tenants.

According to analysis from London lettings agency Benham and Reeves, rents in the capital rose by 11.2% from March 2023 to March 2024. This substantial increase saw the average rent climb from £1,848 to £2,055. The surge in rental prices underscores the high demand for rental properties in London, driven by factors such as a growing population, a strong job market, and the city’s status as a global financial hub.

The increase in rental prices is putting pressure on tenants, who are finding it increasingly difficult to afford accommodation in the capital. Meanwhile, landlords are benefiting from higher rental yields, making London an attractive location for property investment. This trend is expected to continue as demand for rental properties remains strong and supply struggles to keep pace.

Research indicates that the average cost of renting across Britain has risen by 9.1%, reaching £1,246 as of March 2024. This upward trend is most pronounced in London, where rents have increased by 11.2% year on year. This means that the average rent in London rose from £1,848 in March 2023 to £2,055 in March 2024, demonstrating a significant strain on renters in the capital.

Scotland also experienced notable rental growth, with a 10.5% increase over the past year. This positions Scotland as the only other area in Britain besides London to witness double-digit rental growth. These figures highlight the ongoing pressure on tenants as rental costs continue to climb in various regions, affecting affordability and access to housing.

At the local authority level, Brent in London saw the highest rental growth in the UK. The cost of renting in this borough surged by 27% within a year, rising from £1,527 in 2023 to £1,940 per month in 2024. This substantial increase underscores the growing demand and limited supply in the rental market, particularly in high-demand areas like Brent. The sharp rise in rent in Brent reflects broader trends in London where demand for rental properties far outstrips supply, pushing prices to new heights.

The data from Benham and Reeves, a London lettings agency, suggests that landlords in London are benefitting significantly from these trends. As rental prices climb, landlords see higher returns on their properties, but this also poses challenges for renters who must navigate an increasingly expensive rental market. The pressure on rental prices is driven by a combination of factors including limited housing supply, high demand from a growing population, and changes in housing policies.

Across Britain, these rising rental costs highlight a critical issue in the housing market. As rental prices continue to rise, there is an urgent need for strategies to address housing affordability and availability. Without intervention, the trend of rising rents is likely to continue, further exacerbating the challenges faced by renters in securing affordable housing.

London dominates the list of top rental hotspots in Britain, with Greenwich experiencing a 15.8% increase and Islington seeing a 14.2% rise in rental values. Outside of London, Folkestone and Hythe recorded the second-largest increase nationwide at 22.5%, followed by Birmingham at 14%, and Oldham and Ipswich at 13.9% and 13.3%, respectively. 

Meanwhile, three Scottish locations – Lothian, West Dunbartonshire, and Argyll and Bute – also made it to the top 10, with increases ranging from 14.0% to 15.7%. 

In response to rising rents, the Scottish government implemented a temporary prohibition on rent increases between September 2022 and April 2023, followed by a cap of 3% in most cases until March 2024, when the cap expired. However, the impact of these policies on rental rates remains uncertain, with some suggesting that they may have inadvertently contributed to further rent hikes.

Landlords are reportedly exiting the sector in response to what they perceive as hostility from the Scottish government, leading to a tightening of supply amidst high demand. Some have opted to implement significant increases on new tenancies to offset the potential impact of impending rent caps.

According to Marc von Grundherr, Director of Benham and Reeves, the appeal of London remains robust, with properties often being let within hours of listing. Demand is particularly intense in areas like Brent, Greenwich, and Islington, where rental properties are fetching considerably higher rents compared to just a year ago. This trend offers some positive news for landlords, despite the challenges posed by rising mortgage rates and energy costs.

While rental growth has been substantial, with some properties seeing increases of up to 45%, this trend isn’t exclusive to the capital. Strong rental growth has been observed across all regions, particularly in Scotland. Despite some landlords opting to leave the sector, the persistent demand for rental properties has made the venture increasingly profitable for those who remain committed.



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