Figures published by the Office for National Statistics show that private rental prices paid by tenants in Great Britain rose by 2.5% in the 12 months to June.
The ONS statistics show that rents increased well ahead of general inflation, with the Consumer Prices Index registering no year-on-year change in the same month. London recorded the highest level of rent hikes, with rates up by 3.8% in the capital.
Steve Bolton, founder of Platinum Property Partners, said the increase was the biggest rise since January 2013. “A shortage of suitable properties, coupled with strong consumer demand – both from people priced out of the housing market and those who find renting better suits their lifestyle – has set rental prices on an upwards trajectory,” Bolton added.
“This rise in rents isn’t likely to slow down any time soon, particularly as landlords now face a number of increasing costs. The prospect of an interest-rate rise, together with the cap on mortgage interest tax relief introduced in the Budget, could pressure some landlords to increase their rents as they look to regain some of their profits.”
Matt Hutchinson, director of flat and house share site SpareRoom.co.uk, said: “Soaring London rents, up almost 4% in the year to June, are driving up the national average. Londoners in particular are facing sky-high rents, with the capital's rental market suffering from a double whammy of lack of supply and intense demand.
“Renting is the only housing tenure that’s on the increase in the UK, and there’s a worrying lack of commitment from government to improving the situation for tenants.
“We need to address the needs of renters who now face rent hikes and a market that lacks common-sense regulation on issues like unfair letting agent fees.”