Index of Private Housing Rental Prices, UK: February 2021

An experimental price index tracking the prices paid for renting property from private landlords in the UK. Includes measures of owner occupiers’ housing costs.

This is the latest release. View previous releases

Contact:
Email Natalie Jones

Release date:
24 March 2021

Next release:
21 April 2021

1. Main points

  • Private rental prices paid by tenants in the UK rose by 1.4% in the 12 months to February 2021, up from 1.3% in the 12 months to January 2021.

  • Private rental prices grew by 1.3% in England, 1.5% in Wales and 1.1% in Scotland in the 12 months to February 2021.

  • The South West was the English region to see the highest annual growth in private rental prices (2.3%), while London saw the lowest (0.8%).

  • The Office for National Statistics (ONS) has released a public statement on the coronavirus (COVID-19) and the production of statistics; Section 8: Measuring the data describes the situation in relation to the Index of Private Housing Rental Prices (IPHRP).

Back to table of contents

2. UK private rental prices

Private rental prices paid by tenants in the UK increased by 1.4% in the 12 months to February 2021, up from 1.3% in the 12 months to January 2021. For example, a property that was rented for £500.00 per month in February 2020 that had a rent increase of the average UK rate would be rented for £507.00 in February 2021.

Growth in private rental prices paid by tenants in the UK has generally slowed since the beginning of 2016, driven mainly by a slowdown in London over the same period. Rental growth started to pick up at the end of 2018, driven by strengthening growth in London. Rental growth has remained broadly flat since November 2019.

In the 12 months to February 2021, rental prices for the UK excluding London increased by 1.7%, up from 1.5% in the 12 months to January 2021 (Figure 1). London private rental prices increased by 0.8% in the 12 months to February 2021, unchanged from January 2021.

The Association of Residential Letting Agents (ARLA) reported in their Private Rented Sector Report, January 2021 that the number of new prospective tenants rose by more than 25% to 81 registered per branch, whilst the number of properties managed per branch decreased. Less than two in five agents witnessed landlords increasing rent in January.

The Royal Institution of Chartered Surveyors' (RICS') February 2021 Residential Market Survey reported an increase in tenant demand in the three months to February 2021, while the supply of rental properties fell.

These supply and demand pressures can take time to feed through to the Index of Private Housing Rental Prices (IPHRP), which reflects price changes for all private rental properties, rather than only newly advertised rental properties.

Focusing on the long-term trend, between January 2015 and February 2021, private rental prices in the UK increased by 10.2% (Figure 2).

Back to table of contents

3. UK private rental growth rates by country

In England, private rental prices grew by 1.3% in the 12 months to February 2021, unchanged from January 2021. When London is excluded from England, privately rented properties increased by 1.6% in the 12 months to February 2021, up from an increase of 1.5% in January 2021.

Private rental prices in Wales grew by 1.5% in the 12 months to February 2021, down from 1.6% in January 2021.

Rental growth in Scotland increased by 1.1% in the 12 months to February 2021, up from 1.0% in the 12 months to January 2021. Scotland's rental growth has remained weaker than the rest of the UK since August 2016.

The annual rate of change for Northern Ireland in February 2021 (3.3%) was higher than the other countries of the UK. Northern Ireland data have been copied forward since December 2020; the next update to Northern Ireland data will be in the release published on 16 June 2021.

All UK countries experienced a rise in their private rental prices between January 2015 and February 2021, with rental prices in England and Northern Ireland increasing more than those in Wales and Scotland across data time series (Figure 4).

Back to table of contents

4. UK private rental growth by English regions

Focusing on the English regions, the largest annual rental price increase in the 12 months to February 2021 was in the South West at 2.3%, up from 2.2% in January 2021 (Figure 5).

The lowest annual rental price growth was in London where rental prices increased by 0.8% in the 12 months to February 2021. This was followed by the South East, at 1.0%.

Figure 6 shows the historical 12-month percentage growth rate in the rental prices of each of the English regions.

Figure 6: London rental prices experienced larger peaks and troughs than other regions

Index of Private Housing Rental Prices percentage change over 12 months by English region, January 2007 to February 2021

Embed code

Notes:
  1. The grey line shows England’s 12-month average private rental price growth.

Download the data

Back to table of contents

5. Measures of owner occupiers’ housing costs

Owner occupiers' housing costs (OOH) are the costs of housing services associated with owning, maintaining and living in one's own home. This is separate from the cost of purchasing a house, which is purchased partly for the accumulation of wealth and partly for housing services.

OOH is an important component of the household consumption basket. In the Consumer Prices Index including owner occupiers' housing costs (CPIH), the OOH component is measured using the rental equivalence approach, OOH(RE). However, there are alternative ways of measuring OOH in the UK: the net acquisitions approach OOH(NA) and the payments approach OOH(payments).

In the 12-months to December 2020, OOH(RE) grew by 1.3%, OOH(NA) decreased by 1.3% and OOH(payments) decreased by 11.0%. The annual growth rate for OOH(RE) has remained broadly consistent, fluctuating between 1.0% and 1.3% since December 2017. In December 2020, the annual growth rate of OOH(NA) was 2.6 percentage points less than the growth rate of OOH(RE). The annual growth rate of OOH(payments) was 12.3 percentage points less than the growth rate of OOH(RE). Since July 2020,  both OOH(NA) and OOH(payments) showed negative growth, reflecting the changes to the tax paid on property purchases.  

On 8 July 2020, the Chancellor of the Exchequer announced a suspension of the tax paid on property purchases with immediate effect in England and Northern Ireland. This came into effect  on 15 July in Scotland and 27 July in Wales. In England and Northern Ireland, properties up to the value of £500,000 would incur no tax, while the threshold for Scotland and Wales was £250,000. The tax holiday for Scotland is due to end on 31 March 2021. The tax holiday has been extended until 30 June 2021 in England, Northern Ireland and Wales, after which it will end in Wales and the threshold will decrease to £250,000 until 30 September 2021 in England and Northern Ireland. From 1 October 2021, the Stamp Duty thresholds will revert to what they were before 8 July 2020.

The change to the Stamp Duty thresholds was the main driving factor for the decrease in the annual growth rate of OOH(payments); contributing a 7.1 percentage point decrease to the overall growth. Mortgage interest payments also drove the decrease in the annual growth rate of OOH(payments); contributing a 4.1 percentage point decrease to the overall growth. This decrease follows the Bank of England's cut to the UK's interest rate from 0.75% to 0.25% on 11 March 2020. This was then further cut to 0.1% on 19 March 2020.

For OOH(NA), the negative annual growth was driven by the "other services related to the acquisition of dwellings" contribution, which includes transfer costs and Stamp Duty.

Back to table of contents

6. Private rental data

Index of Private Housing Rental Prices, UK: annual weights analysis
Dataset | Released 24 March 2021
Aggregate weights information used in the experimental Index of Private Housing Rental Prices (IPHRP).

Index of Private Housing Rental Prices, UK: monthly estimates
Dataset | Released 24 March 2021
Rental price index historical time series (index values and annual percentage change).

Measures of owner occupiers' housing costs
Dataset | Released 24 March 2021
Owner occupiers' housing costs historical time series (index values, annual percentage change and contributions to the growth rate) – payments, rental equivalence and net acquisitions.

Measures of owner occupiers' housing costs: weights analysis
Dataset | Released 24 March 2021
Aggregate inflation measure for owner occupiers' housing costs historical time series (index values, percentage change and weights) aggregated with the Consumer Prices Index (CPI) – payments, rental equivalence and net acquisitions.

Back to table of contents

7. Glossary

Index of Private Housing Rental Prices (IPHRP)

The Index of Private Housing Rental Prices (IPHRP) measures the change in the price tenants face when renting residential property from private landlords.

Administrative data

Administrative data are data that people have already provided to the government through day-to-day activities, for example, health records, social security payments or educational attainment information.

Owner occupiers' housing costs – rental equivalence approach

Assumes a dwelling is a capital good and therefore not consumed, but instead provides a flow of services that are consumed each period. Rental equivalence imputes owner occupiers' housing costs from the rents paid for equivalent rented properties. Measures the ongoing consumption of owner occupiers' housing services.

Owner occupiers' housing costs – net acquisitions approach

Treats a house as the purchase of a good that is part asset (the land) and part consumable (the house). Includes costs associated with buying and maintaining a house, for example, major repairs, transfer costs and dwellings insurance. Measures the cost of acquiring and maintaining owner occupiers' housing.

Owner occupiers' housing costs – payments approach

Directly measures what households pay as owner occupiers when consuming housing. Includes mortgage interest payments, transaction costs and running costs. Measures payments relating to the ownership of owner occupiers' housing.

Back to table of contents

8. Measuring the data

Coronavirus

The Office for National Statistics (ONS) is working to ensure that the UK has the vital information needed to respond to the impact of the coronavirus (COVID-19) pandemic on our economy and society; this includes how we measure the Index of Private Housing Rental Prices (IPHRP). The price collection for this publication has not been affected.

The ONS remains committed to providing the best and most accurate information we can, serving the public good at a time when it is needed the most. As this situation evolves, we are developing solutions to meet different scenarios depending on the amount of data that are able to be collected by our data suppliers and to consider how we produce forthcoming publications. Users will be informed of any changes to how the data are measured.

The ONS has released a public statement on the coronavirus and the production of statistics. Specific queries must be directed to the Media Relations Office.

End of EU exit transition period

As the UK enters into a new Trade and Co-operation Agreement with the EU, the UK statistical system will continue to produce and publish our wide range of economic and social statistics and analysis. We are committed to continued alignment with the highest international statistical standards, enabling comparability both over time and internationally, and ensuring the general public, statistical users and decision-makers have the data they need to be informed.

As the shape of the UK's future statistical relationship with the EU becomes clearer over the coming period, the ONS is making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK's well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available later this year. 

Future developments

Following the Digital Economy Act 2017, the Office for National Statistics (ONS) gained access to the Valuation Office Agency (VOA) private rental microdata. We aim to re-develop the Index of Private Housing Rental Prices (IPHRP) and private rental market summary statistics (PRMS) to produce mix-adjusted average rental prices that are comparable over time and geography down to lower geographic levels, to better meet user needs.

More information and a timetable for these developments is available in the Private rental prices development plan: January 2021. If you have any queries or feedback on these developments, please email hpi@ons.gov.uk.

Sources

The IPHRP is constructed using administrative data. This means that the index makes use of data that are already collected for other purposes to estimate rental prices. The sources of private rental prices are the Valuation Office Agency (VOA), Scottish Government, Welsh Government and Northern Ireland Housing Executive (NIHE). Data for Northern Ireland also include data provided by Propertynews.com. Estimates are based on a known sample rather than a census.

The sources of the annually updated expenditure weights are the Ministry of Housing, Communities and Local Government (MHCLG), Scottish Government, Welsh Government, NIHE and VOA.

The IPHRP's indices are updated on a monthly basis with the new monthly estimate. Data are indexed with January 2015 as a base year. Data for England are provided from January 2005, data for Wales from January 2009 and data for Scotland from January 2011. UK data are from January 2015.

Quality

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the IPHRP QMI.

Changes to methodology in OOH

This release of the Owner Occupier Housing data has seen a change to part of the data sources used to produce the owner occupiers housing costs – net acquisitions approach, OOH(NA).

Previously, the data on renovations were collected using the statistical Classification of Products by Activity 2008 (CPA 08) framework. The Producer Price Indices methodology has now implemented the Classification of Products by Activity 2.1 (CPA 2.1) framework. CPA 2.1 is the most up-to-date international product classification system, reflecting product change over time. Changes between the frameworks are only seen below the four-digit product level.

This has resulted in some small revisions (no greater than 0.1 index points) to the OOH(NA) series.

Back to table of contents

9. Strengths and limitations

Strengths

The Index of Private Housing Rental Prices (IPHRP) is constructed using large administrative sources, specified in Section 8: Measuring the data. Annually, over 450,000 private rental prices are collected in England, 30,000 in Wales, 25,000 in Scotland and 15,000 in Northern Ireland.

The index does not only measure the change in newly advertised rental prices but reflects price changes for all private rental properties.

Limitations

The IPHRP is published as price indices, rather than average prices. It is also only published down to a country and regional level. While actual rental prices cannot currently be published in the IPHRP because of data access constraints, we are actively working to acquire the necessary data.

The IPHRP is released as an Experimental Statistic.

Back to table of contents

Contact details for this Statistical bulletin

Natalie Jones
hpi@ons.gov.uk
Telephone: +44 (0)1633 456400