The Index of Private Housing Rental Prices (IPHRP) measures the change in price of renting residential property from private landlords. The index is published as a series of price indices covering Great Britain, its constituent countries and the English regions.
IPHRP calculates changes in the prices paid by tenants for renting private housing instead of calculating changes in the latest agreed rental prices. Therefore, the index answers the question: "how much do tenants in privately rented accommodation pay this month compared to the same month in the previous year?".
IPHRP is released as an experimental statistic. This is a new official statistic undergoing evaluation and therefore it is recommended that caution is exercised when drawing conclusions from the published data as the index is likely to be further developed. Once the methodology is tested and assessed, and the publication meets user needs, the IPHRP will be assessed against the Code of Practice to achieve National Statistic status. A complete description of the methodology and the sources used is included in the article Index of Private Housing Rental Prices - Historical Series.
The IPHRP is constructed using administrative data. That is, the index makes use of data that is already collected for other purposes in order to estimate rental prices. The sources of private rental prices are Valuation Office Agency (VOA), Scottish Government (SG) and Welsh Government (WG). All three organisations deploy rental officers to collect the price paid for privately rented properties. The sources of expenditure weights are Department for Communities and Local Government (DCLG), Scottish Government, Welsh Government and VOA. DCLG produces estimates of the private rental dwelling stock for England and its regions. Scottish Government and Welsh Government produce estimates of private rental dwelling stock for Scotland and Wales.
In Great Britain the private rental price series starts in January 2011. This is the date for which all the sources for all constituting countries are available. This index has seen small and continuous increases since January 2011 (Figure 1).
Between August 2012 and August 2013 Great Britain private rental prices grew by 1.2%. For example, a property that was rented for £500 a month in August 2012 which saw its rent increase by the Great Britain average rate would be rented for £506.00 in August 2013.
Rental prices for Great Britain excluding London grew by 0.8% in the same period (Figure 2). This difference is due to the higher inflation experienced in London when compared to the rest of Great Britain and its large weight in the Great Britain index. The large weight that London has in the overall index reflects its high average rental prices and its large volume of private rented property.
All the countries that constitute Great Britain have experienced rises in their private rental prices since 2011 (Figure 3). Since January 2011 England rental prices have increased more than those of Scotland and Wales.
Until April 2013, the annual rate of change in the IPHRP had been higher in England than in Scotland or Wales (Figure 4). However, the annual rate of change has been increasing in Wales and Scotland since late 2012 and is, in August 2013, higher in these countries than in England.
Between August 2012 and August 2013, rental prices grew by 1.1% in England, 1.3% in Scotland and 1.3% in Wales (Figure 5).
The IPHRP series for England starts in 2005. Private rental prices in England show three distinct periods: rental price increases from January 2006 until November 2009, rental price decreases from December 2009 to November 2010, and increasing rental prices from December 2010 onwards (Figure 6). Of these three periods, 2008 showed the largest rental price increases. When London is excluded, England shows a similar pattern but with slower rental price increases.
Figure 7 shows the 12 month growth rate in the rental prices of each of the English regions. Each of the charts includes the England 12 month percentage changes in grey dotted lines.
Since the beginning of 2012 English rental price increases have been stable at between 1.1% and 1.5% year-on-year, with August 2013 rental prices being 1.1% higher than August 2012 rental prices (Figure 8). Excluding London, England showed an increase of 0.7% for the same period.
From August 2012 to August 2013 private rental prices increased in the nine English regions (Figure 9). The largest rental price increases were London at 1.9% and the South East at 1.1%. Rental price increases have been stronger in London and the South East than the rest of England since January 2011.
Some users of IPHRP have asked how does this series differ from the already published Consumer Price Index (CPI) actual rentals for housing. The main difference between these two series is that, in addition to private rented housing, CPI actual rentals for housing includes social housing (housing associations and local authorities) and holiday lets. CPI actual rentals for housing had a higher rate of increase in the period from January 2006 to June 2013 than IPHRP, in part due to target rents in social housing often being linked to inflation. Figure A shows three separate series: the IPHRP, the actual rentals for housing from CPI and the private rental component of the actual rentals for housing. CPI actual rentals for housing is higher for the entire period, while the magnitude of the CPI private rentals subcomponent and the IPHRP are comparable.
Publication of IPHRP
The development of official statistics to cover the private housing rental market and the production of a private housing rental price index was one of the recommendations of the National Statistician’s Review of Housing Market Statistics. This experimental IPHRP release is aimed towards the production of such an index, and development of the index will take place in order to further satisfy user needs.
The production of this index is possible due to recent developments of the housing components of the consumer price indices, and although the same data sources are used by both, the methodology of the IPHRP has been developed in order to produce region level series. IPHRP will be published on a quarterly basis to facilitate user feedback. Once the index has been evaluated, it may be published monthly.
ONS invites users to comment on the methodology and current publication of IPHRP. For example with regards to the choice of target as rents paid by tenants instead of latest agreed rents. Send your comments and queries to firstname.lastname@example.org
ONS has designated the IPHRP as experimental statistics. The results presented in this article are subject to revisions if improvements in the methodology are identified. Results should be interpreted with this in mind.
In future publications improvements to the methodology may be made and these could lead to revisions. All revisions to the index will be announced in the background notes section.
Relevance of the index
The IPHRP has multiple potential uses ranging from the assessment of returns from housing investments or buy-to-let property to the setting or updating of social housing rental prices. Currently the IPHRP is the only statistic with Great Britain coverage on private housing rents. Additionally, it is based on actual paid rents instead of advertised rents (with the exception of Scotland, which is based on advertised rents).
Other rental price statistics
There are other official statistics available for rental prices:
Valuation Office Agency (VOA) publishes private rental market statistics. These cover the average prices paid for renting private housing in England to the level of region and local authority. The composition of the sample used for this publication varies over time and therefore makes it hard to produce reliable comparisons over different time periods.
Department for Communities and Local Government (DCLG) publishes social rent statistics. These cover average prices paid for renting both local authority and private registered provider (housing association) properties in England. These are collected from the continuous recordings of lettings and sales in social housing (CORE) and are available at regional and local authority level.
Welsh Government publishes social rent statistics for Wales. These cover the average weekly rents paid for local authority and registered social landlords, and are available at area level. Available in StatsWales.
The current sources of private rental prices are Valuation Office Agency for England, Scottish Government for Scotland and Welsh Government for Wales. Private rented dwelling stock estimates are sourced from the Department of Communities and Local Government, and Welsh Government. The distribution of property type by country and region is sourced from the English Housing Survey, the Scottish House Condition Survey and Welsh Government. Estimates of the proportions of properties that are rented furnished and unfurnished are produced from the Living Costs and Food Survey. Estimates of the expenditure on property that is rented furnished and unfurnished are sourced from the National Accounts.
This bulleting includes data up to and including August 2013.
Details of the policy governing the release of new data are available from the Media Relations Office.
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Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: email@example.com
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