Private rental prices paid by tenants in Great Britain rose by 1.2% in the 12 months to December 2017; this is the lowest annual growth since the series began in January 2012.
In England, private rental prices grew by 1.3%, Wales saw growth of 1.7% while Scotland saw rental prices increase by 0.4% in the 12 months to December 2017.
London private rental prices grew by 0.4% in the 12 months to December 2017, that is, 0.8 percentage points below the Great Britain 12-month growth rate.
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. All data presented are non-seasonally adjusted.
IPHRP measures the change in price tenants face when renting residential property from private landlords, thereby allowing a comparison between the prices tenants are charged in the current month as opposed to the same month in the previous year. The index does not measure the change in newly advertised rental prices only, but reflects price changes for all private rental properties.
The IPHRP is constructed using administrative data. That is, the index makes use of data that are 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 the Ministry of Housing, Communities and Local Government (MHCLG), Scottish Government, Welsh Government and the VOA.
IPHRP is released as an Experimental Statistic. While the methodology (PDF, 2.42MB) for IPHRP is final, Northern Ireland is currently excluded from the price index. We are working with Northern Ireland Housing Executive to secure private rental data for Northern Ireland. Once the coverage of IPHRP has been improved to that of the UK, the IPHRP will be assessed against the Code of Practice for Official Statistics to achieve National Statistics status.Back to table of contents
Growth in private rental prices paid by tenants in Great Britain has seen signs of a slowdown since the end of 2015, increasing by 1.2% in the 12 months to December 2017. For example, a property that was rented for £500 per month in December 2016, which saw its rent increase by the average rate in Great Britain, would be rented for £506 in December 2017. This slowdown in the growth in private rental prices in Great Britain is driven mainly by a slowdown in London over the same period.
The 12-month growth rate of private rental prices paid by tenants in Great Britain in December 2017 was 1.2%, down from 1.4% in November 2017. Rental prices for Great Britain excluding London increased by 1.7% in the 12 months to December 2017, down from 1.8% in November 2017 (Figure 1). The growth rate for London (0.4%) in the 12 months to December 2017 was 0.8 percentage points below that of Great Britain. This is the lowest annual growth in London since October 2010.
The Royal Institution of Chartered Surveyors (RICS) November 2017 Residential Market Survey reported that demand from prospective tenants weakened while new landlord instructions also continued to decline. The Association of Residential Letting Agents (ARLA) reported in their Private Rented Sector Report for November that the number of tenants experiencing rent increases fell to the lowest level seen since their records began three years ago. They also noted an increase in the number of tenants successfully negotiating rent reductions.
Between January 2011 and December 2017, private rental prices in Great Britain increased by 15.5% (Figure 2); this was strongly driven by the historical growth in private rental prices within London. However, when London is excluded from these figures, private rental prices increased by 11.8% over the same period.
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In England, private rental prices grew by 1.3% in the 12 months to December 2017, down from 1.4% in November 2017. The annual growth rate for England is the lowest since January 2011, when it was also 1.3%.
The annual rate of change for Wales (1.7%) in December 2017 is now higher than the annual rate of change for England (1.3%) and Great Britain (1.2%). Wales has shown a broad increase in its annual growth rate since July 2016 (Figure 3). The annual growth rate for Wales is the highest since this series began in 2010.
Rental growth in Scotland increased by 0.4% in the 12 months to December 2017, up from 0.2% in November 2017. This weaker growth may be due to stronger supply and weaker demand in Scotland as reported by the Association of Residential Letting Agents (ARLA).
All the countries that constitute Great Britain have experienced rises in their private rental prices since 2011 (Figure 4). Since January 2011, rental prices in England have increased more than those in Wales and Scotland.
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Growth in private rental prices in London was 0.4% in the 12 months to December 2017, down from 0.6% in November 2017. The Royal Institute of Chartered Surveyors (RICS) reported in their November 2017 Residential Market Survey that near-term expectations are still negative in the capital, an ongoing trend stretching back to August 2016.
Focusing on the English regions, the largest annual rental price increase was in the East Midlands (2.6%), down from 2.7% in November 2017 (Figure 5). This was followed by the East of England (2.2%), up from 2.1% in November 2017, the South West (2.1%), unchanged from November 2017 and the South East (2.0%), down from 2.3% in November 2017.
The lowest annual rental price increases were in the North East (0.1%), up from 0.0% in November 2017, London (0.4%), down from 0.6% in November 2017, the North West (1.3%), unchanged from November 2017, Yorkshire and The Humber (1.4%), down from 1.6% in November 2017 and the West Midlands (1.8%), unchanged from November 2017.
Figure 6 shows the historical 12-month percentage growth rate in the rental prices of each of the English regions.
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Details of the methodology used to calculate the Index of Private Housing Rental Prices (IPHRP) can be found in the July 2013 IPHRP article but this article requires some updating. In March 2015, methodological improvements were implemented to improve the matching of properties over time; this ensures that we are comparing “like with like”. These methodological improvements were presented in the January 2015 article.
In September 2015, we published an evaluation of our rental price indices against the growth in average private rental prices published by Valuation Office Agency (VOA); please see the article Explaining private rental growth (PDF, 446KB) for more information. Comparisons of IPHRP against other private rent measures can be found in the article published alongside this release.
The IPHRP Quality and Methodology Information report contains important information on:
the strengths and limitations of the data and how it compares with related data
uses and users of the data
how the output was created
the quality of the output including the accuracy of the data
Contact details for this Statistical bulletin
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