In February, the average cost of renting a newly-let property continued to increase across the country.
As a result, the average rent is now £1,120. This is £110 a month higher than the figures reported in February 2022, an increase of 10.9%.
The rise is a result of higher levels of demand for rental homes, particularly in the UK’s largest cities, yet the stock of homes advertised ‘to rent’ still remains on a par with last year.
Learn more about why rents are increasing
While this rental growth is substantial, it only reflects the experience of those moving into new lets.
The Office for National Statistics’s Index of Private Housing Rental Prices, capturing a mix of existing and new lets, shows a more modest increase of 4.9% over the last 12 months.
What's happening to rents in London?
London remains the UK's most expensive place to rent a home, with average rents costing close to £2,000 right now.
But the good news is that the pace at which rents are increasing is now lower than it was last summer (14.9% vs 17.6%).
The monthly cost of a new let in the capital is currently £260 higher than it was a year ago.
And renters looking to settle in more expensive inner London boroughs should be prepared for even larger increases.
The average monthly rent in Westminster and Kensington and Chelsea is now £410 higher than it was in February 2022.
The cheapest place to rent in London right now is Bexley, where the average monthly rent is £1,375.
Average rent increases for London Boroughs in 2023
| London Borough | Average monthly rent | Average rent increase |
|---|---|---|
| Bexley | £1,375 | 11.4% |
| Havering | £1,414 | 9.5% |
| Sutton | £1,423 | 11.5% |
| Croydon | £1,434 | 13.7% |
| Barking & Dagenham | £1,485 | 14% |
| Islington | £2,341 | 16.1% |
| Hammersmith & Fulham | £2,521 | 13.8% |
| Camden | £2,638 | 14.1% |
| City of Westminster | £3,140 | 15.2% |
| Kensington & Chelsea | £3,531 | 13% |
Average rent above £1,000 in all southern regions
Renters in London and the South East are more used to paying higher prices than their counterparts in other regions. However, the East of England and the South West have also become ‘£1000-a-month rental regions’ in the last 12 months.
This results from consistent rental growth since the housing market re-opened in June 2020 following the first Covid-19 lockdown.
In the South West, this growth was supercharged by a desire to live in more rural or seaside settings.
In the regions neighbouring London, we’re seeing the largest rental increases in commuter locations such as Slough (+14.1%), Broxbourne (+13.7%) and Luton (+12.8%).
Commuter areas are likely to continue to attract new renters from the capital, as Londoners search for better value for money.
Cheapest cities to rent
Rents in urban centres continue to grow at a faster pace than in rural areas. This means that renters searching for new lets may find their budgets more stretched.
Smaller regional cities can often offer better value for money. For instance, the average newly let property in Ipswich is £630 cheaper than in Cambridge - the most expensive city to rent in East England.
Expensive locations to rent with cheaper regional alternatives
| Region | Main city | Average rent | Regional alternative | Average rent |
|---|---|---|---|---|
| South East | Brighton | £1,581 | Hastings | £1,009 |
| Eastern | Cambridge | £1,441 | Ipswich | £811 |
| South West | Bristol | £1,298 | Plymouth | £847 |
| Scotland | Edinburgh | £1,134 | Aberdeen | £636 |
| Wales | Cardiff | £1,044 | Swansea | £809 |
| North West | Manchester | £979 | Burnley | £515 |
| Yorkshire & The Humber | Leeds | £916 | Hull | £558 |
| East Midlands | Nottingham | £901 | Mansfield | £690 |
| West Midlands | Birmingham | £850 | Stoke | £663 |
| North East | Newcastle | £745 | Middlesborough | £563 |
Discover the cheapest places to rent in the UK
What will happen to rents in the next few months?
We expect a scarcity of homes for rent to continue over 2023, given the weaker economics for investors, who are now in the process of consolidating their portfolios.
Rental demand is unlikely to be quite as strong as last year, given the current weaker economic growth, but we do expect it to stay above the 5-year average.
In terms of affordability, average rents expressed as a percentage of earnings are now at - or close to - ten-year highs in all regions except London.
We expect this to be near the affordability ceiling as renters can’t afford to pay much more, especially in light of cost-of-living pressures.
This will start to impact the pace of rental growth over 2023, which we expect to slow to 4-5% by the year-end.
A faster slowdown in rents in inner London and some inner-city areas could develop later this year as stretched affordability combines with increases in supply and slower jobs growth.