A record-breaking rent hike has left tenants reeling as average monthly rents soared 6.5% annually to £1,309 in June. This marks the highest year-on-year inflation rate in the rental market since August 2024, according to new data. The stark rise eclipses both consumer price inflation and wage growth figures.
The steep increase coincides with the introduction of the Renters' Rights Act in May, which places restrictions on frequent rent hikes. Under this legislation, landlords can only implement one annual rent increase via Section 13 notices. Experts speculate that this regulatory change may be prompting landlords to set initial tenancy rents higher to offset future limitations.
Regional variations were stark across England. Yorkshire and the Humber saw the most substantial annual increase, with rents climbing by 16%. The South West and North East also recorded significant year-on-year growth, both exceeding 10%. On a monthly basis, the South West experienced a remarkable 29.5% jump between May and June, followed by the North East at 15.7% and Yorkshire and the Humber at 12.6%. Conversely, the West Midlands saw the smallest monthly rise at 0.5%.
The data, based on completed tenancy agreements rather than advertised prices, suggests a potential adjustment within the private rented sector in response to the new regulations. William Reeve, CEO of Goodlord, noted that June's figures represent 'a stark shift' from previous trends. He attributed the recent spike to landlords setting higher initial rents, given the yearly increase limitation.
The rental market developments unfold against a backdrop of wider pressures on the buy-to-let sector, including anticipated tax threshold changes set to impact most landlords by 2028. As the market continues to evolve, it remains unclear whether June's increase signals a temporary recalibration or the beginning of a sustained upward trend.