London’s private rental market is experiencing unprecedented inflation, with rents climbing at the fastest annual rate since records began in 2016.
According to the Office for National Statistics (ONS), private rents in the capital soared by 11.6% in November, up from 10.4% the previous month. The month-on-month increase of 1.6% also marked the largest on record.
This rental surge intensifies the housing crisis and places mounting pressure on Prime Minister Keir Starmer’s Labour government to address housing shortages.
Ahead of July’s general election, Starmer has pledged to build 1.5 million homes over five years to combat the issue. However, high interest rates, a cooling property market, and concerns over landlords exiting the market due to tax changes and rising mortgage costs are hampering progress.
Andrew Montlake, managing director of mortgage broker Coreco, highlighted the pressures landlords face: “In many cases, landlords have no choice but to increase rents as they are in an impossible position due to higher mortgage rates and an increasingly punitive tax regime. Renting is nothing short of brutal.”
Across the UK, private rents rose by 9.1% in November, accelerating from 8.7% the previous month.
This represents only a slight dip from the record annual rise earlier this year. Month-on-month, rents across the country increased by 1%.
The ONS figures contrast with data from property platform Zoopla, which reported that UK rental inflation had cooled to its slowest pace in over three years.
Zoopla’s data, which focuses on new lettings, reflects more immediate market trends, while the ONS measure captures the broader rental stock and responds more slowly to changes.
In London, the average private rent has now reached £2,206 per month, rising by £215 in just one year. This marks the second consecutive double-digit annual increase for the capital’s rental market.
The broader housing market also faces pressure, with UK house prices in October up 3.4% year-on-year, averaging £292,059. Meanwhile, the rental component of the UK’s inflation index reached its highest level in over 30 years in November.
Zoopla noted an increase in the supply of rental properties compared to last year, but availability remains below pre-pandemic levels in most regions except the East Midlands.
The company predicts no significant improvement in rental stock until 2025, prolonging the strain on tenants across the country.
With rents continuing to rise sharply, the UK’s housing crisis is set to remain a key political and economic challenge in the coming years.
