The latest official government rent index shows that average private rents across the UK as a whole increased by 9.2% in the 12 months to March 2024.

This is a small rise from 9.0% in the 12 months to February 2024.

In the same period average monthly rents increased to £1,285 (9.1%) in England, £727 (9.0%) in Wales and £947 (10.5%) in Scotland. The Northern Ireland figure was 10.1%. In England, private rent inflation was highest in London (11.2%) and lowest in the North East (6.1%).

Meanwhile on the sales side, average UK house prices decreased by 0.2% in the 12 months to February 2024, up from a decrease of 1.3% in the 12 months to January.

Jeremy Leaf, a north London agent and former RICS residential chairman, says: “Rents are still rising albeit a little more gently in response to the continuing imbalance between supply and demand. On the ground, we are finding affordability is the main reason although today’s news that the cost of living is not rising as fast will certainly help tenants, particularly those spending a high proportion of their salary on living costs. Most of our landlords also recognise that a good quality tenant is better than the highest possible rent, even though many are struggling to cover higher tax, mortgage and regulatory costs.”

Tom Bill of lettings agency Knight Frank says: “Annual rental value growth is approaching double-digits thanks to a shortage of supply and robust demand. Higher mortgage costs and a proliferation of red tape and taxes means some landlords have left the sector in recent years, which has aggravated the situation. Unfortunately for both landlords and tenants, the political direction of travel suggests there is no change on the horizon.”

Paragon Bank’s managing director of mortgages – Richard Rowntree – agrees, saying: “The increase in private rental inflation is driven by the supply and demand imbalance seen in many parts of the UK. Even though tenant demand has come off the record highs seen last summer, there are still many more tenants than there are properties. With expected strong population growth and household formation in the coming years, the stock of rental homes must be increased to keep pace.”

Meanwhile yesterday’s disappointing inflation figure – it’s now down to 3.2% annually, from 3.4% a month ago – suggests interest rate cuts have been put on ice for a little longer.

Craig Fish, director of Lodestone Mortgages and Protection, says: “With the energy price cap reducing in April, there is hope that this will feed through to the numbers we see in the next [figures] but with fuel prices rising at the pump again and wage inflation still not reading as the Bank of England want it to, there is diminishing hope of a rate cut in June. SWAP rates and lender rates are ticking up again, so we are not out of the woods yet.”

And Riz Malik, director of R3 Mortgages, adds: “The final push to the 2% inflation target will likely be the hardest. However, [governor] Andrew Bailey has highlighted that the UK and US’s inflation issues are different, signalling that a Bank of England rate cut ahead of the Fed may be possible. This is unlikely to move the property market but increases the likelihood of a cut at either the June or August meeting.”

Sarah Coles, head of personal finance at business consultancy Hargreaves Lansdown, also believes the disappointing inflation figure will delay good news for the housing market. 

She says: “Homeowners with a remortgage on the horizon will be desperate for a sign that a rate cut is around the corner. The inflation figures show we’re inching in the right direction, but they’ve still got a wait on their hands.

“There are still an awful lot of inflationary pressures the Bank will be keeping a beady eye on. Rising oil prices showed up in higher petrol prices in March, and over time it will feed into the price of everything that’s manufactured, transported or sold in a shop that needs heating and lighting. At the same time, wages are still rising faster than inflation, so the Monetary Policy Committee is not going to be keen to rush into anything, and the market is pricing in a rate rise no earlier than August.”