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Rents rising much faster than official figures, claims analyst

Official government data suggests that rents are rising by 1.8 per cent a year - but a prominent analyst has gone on record to say the true figure is much higher.

A statement from the Office for National Statistics yesterday put the UK-wide rent rise over the previous 12 months as 1.8 per cent - or, if London is excluded, 2.7 per cent.

However, business consultancy Hargreaves Lansdown claims that the true figure is much more like 8.0 per cent. 


Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, says: “Officially rents are up 1.8 per cent but anyone who has been battling to find an affordable rental property, or having to offer more than the advertised rent to secure somewhere knows that in reality rents are rising far faster in much of the UK.”

She claims that the ONS figures measure all rental prices, rather than just new rents coming to the market. It means someone who locked in a deal one or two years ago will feed into these figures in exactly the same way as someone who rented yesterday. 

And as a result, she insists the ONS is understating recent rental rises.

Instead she says the HomeLet Rental Index, produced by an insurance firm, more closely reflects new rental prices, and shows the average monthly rent is up 8.3 per cent in a year to £1,060.

Coles continues: “:And this isn’t the last of it. The most recent RICS report highlighted that the number of renters is still rising, as the number of households overall increases and more people look for a place of their own after being locked down with their housemates.” 

Coles says that the number of landlords is falling as tax changes persuade them to leave the market and capitalise on higher property prices, or rises in short term letting prices tempts them to move into that market instead. 

“These trends show no signs of slowing, so there’s going to be even more demand for the remaining rental properties in the coming year. RICS expects rent rises to average 5.0 per cent over the next five years, although in some areas the rises will be even harder to manage” she adds.

“For the 17 per cent of people who rent privately in the UK, this is the last thing they need. They already pay an alarming proportion of their income in rent each month – at 31 per cent compared to the 18 per cent that mortgage holders pay – so with prices rising on all sides, finding an even bigger chunk of cash for rent will be incredibly difficult.”

Coles also turns her attention to the resilience of tenants to cope with the scale of rent rises and low availability she outlines.


She says: “The Hargreaves Lansdown Savings and Resilience Barometer produced in partnership with Oxford Economics shows that renters have already faced horrible blows to their finances over the past year, and are much less resilient than their homeowning counterparts. Rising rents could inflict a terrible toll.

“The official figures show that London bucked the trend of rising rents, and is the worst performing region. The pandemic drove a coach and horses through the London rental market. It halted the flow of overseas renters, and ramped up homeworking and hybrid working – which meant renting a shoebox near work made far less sense. 

“However, the more recent figures from HomeLet reveal that London is bouncing back, and new letting prices are up 12.6 per cent. For the 27 per cent of Londoners who rent privately, there’s a real risk that this pushes them over the edge.”

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    Increasing regulation + costs = fewer LLs

    Fewer LLs + more renters = rent rises

    Multiply by EPC C and the result will be devastating for anyone trying to rent a home

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    I think the true rate of inflation is 8% so rents need to rise by this amount just to stand still, just wait until 2026 comes around then rents will sky rocket that is if tenants can even find a property to rent, we have a sleep walking government who ain't seen nothing yet

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    I guess it partly depends on what's included in the rent. If it's an HMO with bills included the rises will have to be substantial. We can only increase rents once a year for existing tenants and have no idea how much the utility bills will be over the next 12 months.
    Historically I've very rarely increased rents for existing tenants. Mainly they're in HMOs or student houses so people used to stay 2 or 3 years and I'd just increase the rent when they vacated. Now they're staying much longer I may need to revise that policy especially if the utility market doesn't settle down.

    For self contained units it also depends on when the last rent increase was. I'm just increasing one for the first time in 9 years. It's still £30 lower than the LHA rate and £100 less than anything on Rightmove. Had I simply increased the rent by £10 a month every year the tenant would have paid an extra £4300 over the last 9 years and the rent would be closer to LHA level. I don't imagine the tenant will see it quite that way though.


    I made that mistake some years ago Jo, the tenant was a good guy but he was paying £75 per week for a 2 bed terraced house I should have increased the rent by a small amount every year.

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    Landlord don’t have to pay utility Bills in HMO’s if it one property one let, they pay their own for what they use.
    I don’t understand why one property as one letting should be a licensable HMO and if occupants in anyway remotely
    connected exempt from regulation’s.


    Michael, HMOs come in many different types and standards aimed at various different tenant profiles.
    Some will be let as a whole house to a group of friends in which case they may well be responsible for the utility bills.
    Others will be let on individual room tenancies. You could have prepayment meters all over the place and expect the tenants to pay for their own individual usage. You'd still have to pay for the communal areas though as landlord if the tenants each have individual tenancy agreements.

    I prefer to offer all inclusive rents so the houses are properly heated. My student HMOs are mainly on joint tenancy agreements, my professional ones are all individual tenancies. I aim for like minded tenants and encourage existing ones to be very much part of the selection process for newbies. As a result they tend to spend a lot of time in the communal lounge or kitchen together.

    Other landlords may go for the more traditional bedsit type HMOs where tenants rarely see or speak to eachother.

    Each to his own and there's pros and cons with each model.

    I agree that it's bizarre about the connected tenants being exempt from HMO regulations. How are we supposed to know if someone is really connected or not?

    Suzy OShea

    Michael Foley,

    HMOs are generally shared houses or flats. That's what it stands for House of Multiple Occupation. Properties shared by newer than 4 people so far are not classed as HMOs. That may change in the future. Such flats could be let on. A group lease and do not need to include utilities. But most HMOs do and the tenants prefer it that way.

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    Tricia - Very well put, if the ' C ' comes in then there will be a Tsunami of sales prior to it kicking in to ensure that the minimum CGT is paid, i am looking at 2026 to start mine. This govt has zero clue and i suspect they really do not care. The current rate of rent will seem positively low when the '' sell off '' is in full swing.

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    Suppose Government are seriously concerned about the Climate, have they not zeroed vat tax on this work, just bought new Boiler which attracted hundreds of pounds vat, so it’s a penalty. I certainly have bought Boilers in years gone by for less than the vat is now.

  • Suzy OShea

    What everyone seems to have forgotten is that many flats in central London and other cities saw decreases in rents of up to 30% due to the various lockdown. Of course rents are no rising fast, especially in these areas. Factor in the huge increases in gas and electricity prices and these rents aren't even returning to pre-COVID levels. So they don't take into account the large inflationary rises in the past two years.


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