Index of Private Housing Rental Prices, UK: June 2023

• Private rental prices paid by tenants in the UK rose by 5.1% in the 12 months to June 2023, up from 5.0% in the 12 months to May 2023.

• Annual private rental prices increased by 5.1% in England, 5.8% in Wales and 5.5% in Scotland in the 12 months to June 2023.

• Within England, the highest annual percentage change in private rental prices in the 12 months to June 2023 was in the West Midlands, at 5.4%, while the North East saw the lowest (4.4%).

• London's annual percentage change in private rental prices was 5.3% in the 12 months to June 2023, above the England average and its highest annual rate since September 2012.

Private rental prices paid by tenants in the UK increased by 5.1% in the 12 months to June 2023, representing the largest annual percentage change since this UK data series began in January 2016.

The annual growth rate of private rental prices in the UK began to increase in the second half of 2021. Annual growth was seen across all regions except London, where prices decreased. The annual percentage change in rents increased across all regions in 2022, including in London, and this has continued in early 2023.

In the 12 months to June 2023, rental prices for the UK (excluding London) increased by 5.1%, up from an increase of 4.9% in the 12 months to May 2023. Private rental prices in London (which accounts for almost a third of UK rental expenditure) increased by 5.3% in the 12 months to June 2023, up from an increase of 5.1% in the 12 months to May 2023. This is the highest annual percentage change in London since September 2012.

The Association of Residential Letting Agents (ARLA) state in their June 2023 Housing Insight Report that the number of new prospective tenants remained strong in June compared with May, while stock levels remain insufficient. The mismatch between supply and demand continued to grow in June, with figures showing a 57% increase in the mismatch since June 2022. This means that pressure on rent prices remains, with a majority of responding agents reporting rents increasing month-on-month on average.

The Royal Institution of Chartered Surveyors (RICS) reported in their June 2023 UK Residential Market Survey that tenant demand increased in June while new landlord instructions have fallen to the lowest amount since May 2020. With rising demand still being met with weakening supply, RICS reported that rental prices are expected to rise higher over the near term.

Supply and demand pressures can take time to be reflected in the Index of Private Housing Rental Prices (IPHRP). This is because the IPHRP reflects price changes for all private rental properties, rather than only newly advertised rental properties. Our Measuring rents: stock versus flow blog post explains how we measure price change in the IPHRP.

England

In England, private rental prices increased by 5.1% in the 12 months to June 2023. When London is excluded from England, private rental prices increased by 4.9% in the 12 months to June 2023. The figures are the highest annual percentage changes since these data series began in January 2006.

Wales

Private rental prices in Wales increased by 5.8% in the 12 months to June 2023. This is up from an increase of 5.0% in May 2023, and is the highest annual percentage change since the Wales data series began in January 2010. Wales' annual inflation rose this month because the average rental price rose sharply in the month of June 2023 (0.9%), compared with a smaller monthly rise a year before in June 2022 (0.2%).

Private organisations, such as Homelet, report annual inflation for new tenancies in Wales. Over the past year, HomeLet's annual inflation for new tenancies in Wales has increased to 10.1% in the 12 months to June 2023. It is likely that the rise in IPHRP's annual inflation for Wales in June 2023 is starting to reflect the observed rise in new lets annual inflation over the past year.

Scotland

Private rental prices in Scotland increased by 5.5% in the 12 months to June 2023. This is up from an increase of 5.4% in May 2023, and is the highest annual percentage change since the Scotland data series began in January 2012. However, IPHRP's stock measure remains substantially below HomeLet's annual inflation for new tenancies in Scotland, at 15.8% in the 12 months to June 2023. It is likely that the continued rise in IPHRP's annual inflation for Scotland is reflecting the high new lets annual inflation observed during the past year, as it feeds into IPHRP's stock measure. The Cost of Living (Tenant Protection) Scotland Bill capped mid-tenancy rental price increases to 0% (and up to 3% in certain circumstances) until 31 March 2023. On 1 April 2023, this rental price increase cap was increased to 3% (and up to 6% in certain circumstances). This rental price cap only applies to in-tenancy rent increases, with no restriction on rent increases for new lets.

The rise in annual rental price inflation for Scotland since this bill was passed will largely reflect increasing rental prices from new lets as they continue to feed into the Scotland IPHRP stock measure. There are also compositional differences between the Scotland rental data and Scotland's rental sector. Measures for Scotland are mainly based on advertised rental data for new lets, along with assumptions on average periods between rent price increases, so changes in rents for existing tenants are largely estimated. The IPHRP methodology assumes that rental price remains constant for up to 14 months if updated rental data for that property are not available, and replaces records more than 14 months old. Since only a small proportion of Scotland data collected are based on updated rental data from existing lets, replacement data will be predominantly based on newly advertised rents, which are not subject to the price cap. Users are advised to bear this in mind when interpreting the estimates for Scotland and comparing with other UK countries.

Northern Ireland

Private rental prices in Northern Ireland increased by 9.6% in the 12 months to April 2023, higher than other countries of the UK. Northern Ireland data lag behind the rest of the UK and will be updated in our next Index of Private Housing Rental Prices, UK bulletin, to be published on 16 August 2023.

Of the English regions, the highest annual rents inflation was in the West Midlands, at 5.4% in the 12 months to June 2023. The lowest annual inflation was in the North East, at 4.4% in the 12 months to June 2023.

Figure 5: London rental prices experienced larger peaks and troughs than other regions

Private rental price percentage change over 12 months, by English region, January 2007 to June 2023

Notes:

1. The grey line shows England's 12-month average rental price percentage change.

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Many private sector organisations, including estate agents and property companies, produce estimates of changes in rental prices. This includes Zoopla, Rightmove and HomeLet. These sources provide an extensive range of rental data, with rental measures that show a diverse picture.

Rightmove and HomeLet reported UK annual rental price inflation in the 12 months to June 2023 was 10.8% and 10.4%, respectively, while Zoopla reported annual inflation was 10.4% in the 12 months to May 2023 (latest available data). These inflation rates are much higher than the Office for National Statistics's (ONS's) Index of Private Housing Rental Prices (IPHRP) reported UK annual inflation estimate for June 2023 (5.1%).

Historically, the annual rental price inflation rates measured by the private sector organisations have differed to, and tend to be higher than, IPHRP estimates and some tend to be more volatile (Figure 6). This is because the private sector measures primarily focus on newly let properties (a flow measure), while the IPHRP estimates are based on a mixture of newly let properties and existing lets (a stock measure).

The Valuation Office Agency (VOA) rental officers suggest that the greatest price rises occur when properties are newly let, compared with existing tenants, who tend to see smaller price increases. Therefore we can expect the IPHRP to be less volatile, but also to lag behind the private sector measures, as changes in rental prices from new lets can take time to feed through to the IPHRP. Our Measuring the UK housing market blog provides more detail on the differences between stock and flow measures of rental prices.

During 2021 and early 2022, all three private sector measures reported increasing annual private rental price inflation of newly let properties, reaching a peak in summer 2022. Since late 2022, Rightmove and Zoopla show annual inflation of newly let rental prices has been generally slowing. The trend is uncertain in HomeLet data.

Since IPHRP measures rental price changes of the entire privately rented stock, changes in annual inflation of newly let rental prices take time to be reflected in IPHRP's measure. Despite measuring the stock of rents, IPHRP has reported new record high UK annual rental price inflation for the past 14 consecutive months, reflecting the rapidly rising rental prices observed by private sector measures of new lets. IPHRP reported increasing annual private rental price inflation from late 2021 and, as of June 2023, continues to report increasing annual rental price inflation for the entire privately rented stock.

Further information on Zoopla, Rightmove, HomeLet and Index of Private Housing Rental data sources and their differences are available in our Private Rental Growth Measures, a UK comparison: January to December 2022 article.

Index of Private Housing Rental Prices (IPHRP)

The IPHRP measures the change in the price that tenants face when renting residential property from private landlords.

Administrative data

Administrative data are data that people have already provided to the government through day-to-day activities, for example, health records, social security payments or educational attainment information.

Economic statistics governance after EU Exit

More information regarding the new governance following the UK's exit from the EU (Brexit) is available in our Index of Private Housing Rental Prices, UK: September 2022 bulletin.

Future developments

Following the Digital Economy Act 2017, the Office for National Statistics (ONS) gained access to Valuation Office Agency (VOA) private rental microdata. We aim to redevelop the Index of Private Housing Rental Prices (IPHRP) and private rental market summary statistics (PRMS) to produce mix-adjusted average rental prices that are comparable over time. We also aim to refine geography to lower geographic levels, to better meet user needs.

An overview of the methodology that we intend to use is available in our article, The redevelopment of private rental prices statistics, intended methodology. We will now need to spend more time ensuring the production system is developed on a strategic platform and is sustainable. This has resulted in our initial timetable being out of date. More information, and a timetable for these developments (updated 6 July 2023), is available in our Private rental prices development plan: updated February 2022. If you have any queries or feedback on these developments, please email us at hpi@ons.gov.uk.

Sources

The IPHRP is created using administrative data. This means that the index makes use of data that are already collected for other purposes to estimate rental prices. The sources of private rental prices are the VOA, Scottish Government, Welsh Government and Northern Ireland Housing Executive (NIHE). Data for Northern Ireland also include data provided by Propertynews.com.

The sources of the annually updated Index of Private Housing Rental Prices, UK: annual weights analysis dataset are the Department for Levelling Up, Housing and Communities (DLUHC), Scottish Government, Welsh Government, NIHE and VOA.

The IPHRP's indices are updated on a monthly basis with the new monthly estimate. Data are indexed with January 2015 as a base year. Data for England are provided from January 2005, data for Wales from January 2009, and data for Scotland from January 2011. UK data are from January 2015.

Northern Ireland rental data are not available for the latest two months. To produce provisional estimates of UK private rental price index and annual percentage change for the latest two months, Northern Ireland's index has been carried forward (for instance, rental price inflation has been assumed to be 0% for the latest two months). Each subsequent month, updated Northern Ireland data are used to revise estimates for the UK. This means there is a two-month revision period for the UK estimates in IPHRP.

Quality

More information on strengths, limitations, appropriate uses, and how the data were created is available in our Index of Private Housing Rental Prices Quality and Methodology Information (QMI).

Strengths

The Index of Private Housing Rental Prices (IPHRP) is constructed using large administrative sources, specified in Section 8: Measuring the data. Annually, over 450,000 private rental prices are collected in England, 30,000 in Wales, 25,000 in Scotland and 15,000 in Northern Ireland. The index not only measures the change in newly advertised rental prices, but reflects price changes for all private rental properties, including for existing tenancies.

Limitations

Data collection differs between UK nations. For example, in England and Wales, rental price data for achieved rents are collected for both new tenancies and existing tenancies. When 12 months have passed following a property's last update, Rent Officers receive a notification, which supports Rent Officer aims to revisit previous properties.

However, in Scotland, rents data gathered are predominantly rents data for advertised new lets, not achieved rents. Additionally, data collection procedures do not include actively seeking to re-collect data for previously collected properties. Rents data for Northern Ireland are also based on advertised new lets data.

The IPHRP is published as price indices, rather than average prices. It is also only published down to a country and regional level. Average rental price levels cannot currently be published in IPHRP because of data access constraints. Our redevelopment of private rental prices statistics work aims to address this.

The IPHRP is released as Experimental Statistics, and is subject to revisions if improvements in the methodology are identified. Results should be interpreted with this in mind.