Tenants’ energy costs set to fall in coming months - lettings agency

Rental growth in Britain has slowed says lettings agency Hamptons, with the average newly let rent rising 6.7% over the past year – well below the 12% peak in August 2023.

Even so, rental prices remain 31% higher than before the pandemic, particularly in the North West where prices are now 42% above pre-pandemic levels.

Average rent in the West Midlands is now over £1,000 per month - the first region outside the South of England to reach this threshold. It’s also the only part of Britain where rent rises are still in double figures. 

In contrast, Inner London saw the smallest rental rise of just 0.4% over 12 months and up 17% since the pandemic began. 

Hamptons also says tenants’ energy bills have hit a seven-year high last month, equating to an additional month’s rent annually. This is set to fall thanks to a 12% reduction in the energy price cap this month with further falls likely in June.

Over the past decade, rental prices have increased by 54%, while energy bills have risen by 46%. Currently, tenants are paying nearly £5,993 more annually in rent and energy bills compared to 10 years ago.

“During the last two years, tenants have found themselves squeezed financially from all sides. While their ability to afford the rent is typically tested when they move into a new home, increases in rents have come alongside big hikes in energy and food bills” says Aneisha Beveridge, head of research at Hamptons. 

“In the short term at least, falling energy prices are likely to see the issue drop down the political agenda. Therefore, minimum EPC standards for rented homes look unlikely to be introduced by the current government.  But with a potential change of government, in the medium-term, landlords might see renewed pressure to make the homes they’re renting out more energy efficient

“When the number of rental homes on the market is up 30% on last year and the number of potential tenants is down by a fifth, rents would normally be falling. But these year-on-year comparisons mask the longer-term picture, where supply is down and demand is up. 

“While rental growth has slowed from record levels, as more landlords roll off cheaper fixed-term deals, rents are still creeping upwards.  In most places outside central London, landlords are still achieving record rents on the back of long-term tax and interest rate pressures.”

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