Index of Private Housing Rental Prices, Great Britain: July 2018

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

Nid hwn yw'r datganiad diweddaraf. Gweld y datganiad diweddaraf

Cyswllt:
Email Rhys Lewis

Dyddiad y datganiad:
15 August 2018

Cyhoeddiad nesaf:
19 September 2018

1. Main points

  • Private rental prices paid by tenants in Great Britain rose by 0.9% in the 12 months to July 2018, down from 1.0% in the 12 months to June 2018.

  • In England, private rental prices grew by 0.9%, Wales saw growth of 1.0% while Scotland saw rental prices increase by 0.5% in the 12 months to July 2018.

  • London private rental prices decreased by 0.3% in the 12 months to July 2018; this is the lowest annual rate since September 2010.

Nôl i'r tabl cynnwys

2. Things you need to know about this release

The Index of Private Housing Rental Prices (IPHRP) measures the change in price of renting residential property from private landlords. The index is published as a series of price indices covering Great Britain, its constituent countries and the English regions. All data presented are non-seasonally adjusted.

IPHRP measures the change in 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 measure the change in newly advertised rental prices only, 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) and Welsh Government (WG). All three organisations deploy rental officers to collect the price paid for privately-rented properties. Annually, over 450,000 private rents prices are collected in England and 30,000 and 25,000 in Wales and Scotland respectively. The sources of expenditure weights are the Ministry of Housing, Communities and Local Government (MHCLG), Scottish Government, Welsh Government and the VOA.

IPHRP is released as an Experimental Statistic. While the methodology (PDF, 2.42MB) for IPHRP is final, Northern Ireland is currently excluded from the price index. We are working with Northern Ireland Housing Executive to secure private rental data for Northern Ireland. Once the coverage of IPHRP has been improved to that of the UK, the IPHRP will be assessed against the Code of Practice for Statistics to achieve National Statistics status.

Nôl i'r tabl cynnwys

3. Growth in Great Britain private rental prices slows

Growth in private rental prices paid by tenants in Great Britain has slowed since the end of 2015, increasing by 0.9% in the 12 months to July 2018. For example, a property that was rented for £500 per month in July 2017, which saw its rent increase by the average rate in Great Britain, would be rented for £504.50 in July 2018. This slowdown in the growth in private rental prices in Great Britain is driven mainly by a slowdown in London over the same period.

The 12-month growth rate of private rental prices paid by tenants in Great Britain in July 2018 was 0.9%, down from 1.0% in June 2018. Rental prices for Great Britain excluding London increased by 1.5% in the 12 months to July 2018, down from 1.6% in June 2018 (Figure 1). The growth rate for London in the 12 months to July 2018 was negative 0.3%, down from negative 0.2% in June 2018.

The Royal Institution of Chartered Surveyors (RICS) June 2018 Residential Market Survey reported a drop in new instructions coming through to agents. Their latest data showed the 21st consecutive month in which the feedback has pointed to a smaller fresh supply of rental properties coming to market. With demand solid, their Rent Expectations series is pointing to modest increases over the next 12 months.

In contrast, the Association of Residential Letting Agents (ARLA) reported in their Private Rented Sector Report for June 2018 that supply of rental properties rose to the highest level recorded for 2018 so far. Previous Private Rented Sector Reports do note a continued supply shortage in the rental market. 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.

Between January 2011 and July 2018, private rental prices in Great Britain increased by 16.0% (Figure 2); this was strongly driven by growth in private rental prices within London. When London is excluded from these figures, private rental prices increased by 12.6% over the same period.

Nôl i'r tabl cynnwys

4. Growth in Wales private rental prices above England and Scotland

The annual rate of change for Wales (1.0%) in July 2018 is still marginally higher than the annual rate of change for England (0.9%) and Great Britain (0.9%). 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. This slightly stronger growth in Wales may be a response to stronger rental demand in Wales, as reported by the Association of Residential Letting Agents (ARLA) in their April 2018 report.

In England, private rental prices grew by 0.9% in the 12 months to July 2018, down from 1.0% in June 2018.

Rental growth in Scotland increased by 0.5% in the 12 months to July 2018, down from 0.6% in June 2018. The historic weaker growth since mid-2016 may be due to stronger supply and weaker demand in Scotland, as reported by ARLA in their Private Rented Sector Report for June 2018.

All the countries that constitute Great Britain have experienced rises in their private rental prices since 2011 (Figure 4). Since January 2011, rental prices in England have increased more than those in Wales and Scotland.

Nôl i'r tabl cynnwys

5. London private rental prices fall over the year

Growth in private rental prices in London was negative 0.3% in the 12 months to July 2018, down from negative 0.2% in June 2018. This is London's lowest annual rate since September 2010 when it was negative 0.4%. The Royal Institution of Chartered Surveyors (RICS) reported in their June 2018 Residential Market Survey that expectations are still negative in London, an ongoing trend stretching back to August 2016.

Focusing on the English regions, the largest annual rental price increase was in the East Midlands (2.7%), down from 2.8% in June 2018 (Figure 5). This was followed by the South West (1.9%), down from 2.1% in June 2018 and the East of England (1.8%), down from 1.9% in June 2018.

The lowest annual rental price increase was in London (negative 0.3%), down from negative 0.2% in June 2018. It was followed by the North East (0.1%), down from 0.2% in June 2018.

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

Nôl i'r tabl cynnwys

7. Quality and methodology

Details of the methodology used to calculate the Index of Private Housing Rental Prices (IPHRP) can be found in the July 2013 IPHRP article but this article requires some updating. In March 2015, methodological improvements were implemented to improve the matching of properties over time; this ensures that we are comparing “like with like”. These methodological improvements were presented in the January 2015 article.

In September 2015, we published an evaluation of our rental price indices against the growth in average private rental prices published by Valuation Office Agency (VOA); please see the article Explaining private rental growth (PDF, 446KB) for more information. Comparisons of IPHRP against other private rent measures can be found in the article published alongside this release.

The IPHRP 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

Nôl i'r tabl cynnwys