Index of Private Housing Rental Prices, UK: December 2018

An experimental price index tracking the prices paid for renting property from private landlords in the UK.

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Cyswllt:
Email Rhys Lewis

Dyddiad y datganiad:
16 January 2019

Cyhoeddiad nesaf:
13 February 2019

1. Main points

  • Private rental prices paid by tenants in the UK rose by 1.0% in the 12 months to December 2018, up from 0.9% in November 2018.

  • In England, private rental prices grew by 1.1%, Wales experienced growth of 0.8%, while in Scotland private rental prices increased by 0.6% in the 12 months to December 2018.

  • London private rental prices rose by 0.2% in the 12 months to December 2018, the first increase over the year since March 2018.

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2. Things you need to know about this release

The Index of Private Housing Rental Prices (IPHRP) measures the change in the price tenants face when renting residential property from private landlords, thereby allowing a comparison between the prices tenants are charged in the current month as opposed to the same month in the previous year. The index does not only measure the change in newly advertised rental prices, but reflects price changes for all private rental properties.

The IPHRP is constructed using administrative data. That is, the index makes use of data that are already collected for other purposes to estimate rental prices. The sources of private rental prices are Valuation Office Agency (VOA), Scottish Government (SG), Welsh Government (WG) and Northern Ireland Housing Executive (NIHE). All these organisations deploy rental officers to collect the price paid for privately rented properties. Data for Northern Ireland also includes data provided by propertynews.com. Annually, over 450,000 private rents prices are collected in England, 30,000 in Wales, 25,000 in Scotland and 15,000 in Northern Ireland. The sources of expenditure weights are the Ministry of Housing, Communities and Local Government (MHCLG), Scottish Government, Welsh Government, Northern Ireland Housing Executive and the VOA.

IPHRP is released as an Experimental Statistic. While the methodology for IPHRP is final, Northern Ireland data were previously excluded from the price index. We have since worked with the Northern Ireland Housing Executive to secure private rental data for Northern Ireland with results first published in our August 2018 release on 19 September 2018. We have also used these data to improve the coverage of IPHRP to that of the UK, which was published for the first time in our September 2018 release on 17 October 2018.

The IPHRP is scheduled to be assessed against the Code of Practice for Statistics in early 2019 with the aim of achieving National Statistics status for the release.

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3. Growth in UK private rental prices increases

Private rental prices paid by tenants in the UK increased by 1.0% in the 12 months to December 2018, up from 0.9% in November 2018. For example, a property that was rented for £500 per month in December 2017, which saw its rent increase by the average rate in the UK, would be rented for £505 in December 2018. Growth in private rental prices paid by tenants in the UK has slowed since the beginning of 2016, driven mainly by a slowdown in London over the same period.

Rental prices for the UK excluding London increased by 1.4% in the 12 months to December 2018, unchanged from November 2018 (Figure 1). London private rental prices increased by 0.2% in the 12 months to December 2018; up from being unchanged (0.0%) in November 2018.

The Royal Institution of Chartered Surveyors’ (RICS’s) November 2018 Residential Market Survey reported demand from prospective tenants holding broadly steady for the second month running. The new landlord instructions series remained in negative territory signalling a decline in the supply of fresh rental stock coming on to the market.

The Association of Residential Letting Agents (ARLA) reported in their Private Rented Sector Report for November 2018 that both the supply of properties available to rent and the demand from prospective tenants fell.

These supply and demand pressures can take time to feed through to the Index of Private Housing Rental Prices (IPHRP), which reflects price changes for all private rental properties, rather than only newly advertised rental properties.

Focusing on the long-term trend, between January 2015 and December 2018, private rental prices in the UK increased by 6.9% (Figure 2).

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4. Strengthening growth in England

In England, private rental prices grew by 1.1% in the 12 months to December 2018, up from 1.0% in November 2018. When London is excluded from England, privately rented properties increased by 1.5% in the 12 months to December 2018.

Private rental prices in Wales grew by 0.8% in the 12 months to December 2018, down from an increase of 0.9% in November 2018. Wales showed a broad increase in its annual growth rate between July 2016 (Figure 3) and the end of 2017, but has fallen back during 2018.

Rental growth in Scotland increased by 0.6% in the 12 months to December 2018, up from 0.5% in the 12 months to November 2018. The historic weaker growth since mid-2016 may be due to stronger supply and weaker demand in Scotland, as reported by the Association of Residential Letting Agents (ARLA) in their Private Rented Sector Report for October 2018.

The annual rate of change for Northern Ireland (1.6%) in September 2018 is higher than the other countries of the UK. Northern Ireland has seen an increase in its annual growth rate between the end of 2016 and the end of 2017, but has fallen back slightly during 2018. Northern Ireland data have been copied forward since September 2018. The next update to Northern Ireland data will be in March 2019.

All UK countries have experienced rises in their private rental prices since 2015 (Figure 4). Since January 2015, rental prices in England have increased more than those in Wales, Scotland and Northern Ireland.

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5. London private rental prices increase at the end of the year

London private rental prices increased by 0.2% in the 12 months to December 2018, up from being unchanged (0.0%) in the 12 months to November 2018. This is the first increase over the year in London since March 2018.

The Royal Institution of Chartered Surveyors (RICS) reported in their September 2018 Residential Market Survey that tenant demand has staged a sustained recovery in London over recent months, increasingly outstripping supply. However, they note that rents are still anticipated to see little change in the near-term.

Focusing on the English regions, the largest annual rental price increase was in the East Midlands (2.5%), down from 2.7% in November 2018 (Figure 5). This was followed by the West Midlands (1.8%), unchanged from November 2018, and Yorkshire and The Humber (1.8%), up from 1.7% in November 2018.

The lowest annual rental price growth was in London where prices increased by 0.2%, up from being unchanged (0.0%) in November 2018. It was followed by the North East, which increased by 0.3%, down from 0.4% in November 2018.

Figure 6 shows the historical 12-month percentage growth rate in the rental prices of each of the English regions.

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7. Quality and methodology

The Index of Private Housing Rental Prices Quality and Methodology Information report contains important information on:

  • the strengths and limitations of the data and how it compares with related data

  • uses and users of the data

  • how the output was created

  • the quality of the output including the accuracy of the data

Private rental growth measures, a UK comparison, compares the growth in the Index of Private Housing Rental Prices to other measures of private rental growth.

Quality assurance of administrative data used in private rental housing statistics documents the administrative data sources used in the production of the Index of Private Housing Rental Prices and the quality assurance processes applied to them.

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