London Rents Rising at Record Pace Add to Pressure on Labour
(Bloomberg) -- Housing rents in London are soaring at the fastest pace on record after a resurgence that deepens the crisis facing the city’s tenants.
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Private rental inflation jumped to 11.6% in the capital in November, a sharp acceleration from 10.4% previously, the Office for National Statistics said Wednesday. It was the biggest increase since annual records began in 2016 and the 1.6% month-on-month jump was also the largest.
The figures will ramp up pressure on the new Labour government to boost the supply of housing, a key issue in the general election in July. Prime Minister Keir Starmer has promised to build 1.5 million homes over five years to ease the shortages, but housebuilding has tumbled due to high interest rates and a weaker property market. There are also concerns about landlords selling up in response to a tax clampdown and high mortgage rates.
“In many cases, landlords have no choice but to increase rents as they are in an impossible position as a result of higher mortgage rates and an ever more punitive tax regime,” said Andrew Montlake, managing director at mortgage broker Coreco. “Renting is nothing short of brutal.”
Across the UK, rents rose 9.1%, up from a 8.7% increase previously and only slightly below the record rise seen earlier this year. They grew 1% month-on-month.
Still, the data contrasts figures from Zoopla that offered a more optimistic outlook for tenants, with UK rental inflation cooling to its lowest pace in over three years. The property website’s measure is more timely as it tracks new lettings, whereas the ONS gauge looks at the overall stock of rental properties — meaning it is slower to react to market shifts.
In the ONS data, the average private rent in London soared to £2,206 ($2,795), an increase of £215 this year. The latest figures marked the second consecutive double-digit annual increase in private rents in the capital.
The ONS also said UK house prices in October were 3.4% higher compared to a year ago, at an average £292,059.
Separate data published Wednesday showed the rental component of the UK’s wider inflation figures hit the highest in over 30 years in November.
According to Zoopla, the supply of available rental properties across the UK is higher than it was a year ago. However, the stock of rental homes remains below pre-pandemic levels in every region except the East Midlands and the company does not expect supply to increase significantly in 2025.
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