- Private rental prices paid by tenants in Great Britain rose by 2.1% in the 12 months to February 2017; this is down from 2.2% in January 2017.
- In England, private rental prices grew by 2.3%, Wales saw growth of 0.5% while Scotland saw zero growth in the 12 months to February 2017.
- London private rental prices grew by 1.9% in the 12 months to February 2017, which is 0.2 percentage points below the Great Britain 12-month growth rate.
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 in order to estimate rental prices. The sources of private rental prices are Valuation Office Agency (VOA), Scottish government (SG) and Welsh government (WG). All 3 organisations deploy rental officers to collect the price paid for privately rented properties. The sources of expenditure weights are the Department for Communities and Local Government (DCLG), Scottish government, Welsh government and the VOA.
IPHRP is released as an Experimental Statistic. While the methodology 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 Official Statistics to achieve National Statistic status.Back to table of contents
Between January 2011 and February 2017, private rental prices in Great Britain increased by 14.4%, strongly driven by the growth in private rental prices within London. When London is excluded, private rental prices increased by 10.3% over the same period.
The rental market in Great Britain continued to show signs of strength in the 12 months to February 2017, as prices grew by 2.1%. For example, a property that was rented for £500 a month in February 2016, which saw its rent increase by the average rate in Great Britain, would be rented for £510.50 in February 2017.
The 12-month growth rate of private rental prices paid by tenants in Great Britain fell slightly in February 2017 to 2.1%, from 2.2% in January 2017. Rental prices for Great Britain excluding London increased by 2.2% in the 12 months to February, down from 2.3% in January 2017 (Figure 2). The growth rate for London (1.9%) in the 12 months to February is 0.2 percentage points below that of Great Britain.
Inflation in the rental market is likely to have been caused by demand in the market outpacing supply. The Royal Institute of Chartered Surveyors (RICS) January 2017 Residential Market Survey reported continued rising tenant demand at the national level with the flow of new landlord instructions failing to improve for a fourth consecutive quarter. The Association of Residential Letting Agents (ARLA) Private Rented Sector Report for January 2017 noted both supply and demand for rental properties increasing in January, following a seasonal lull in December.
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All the countries that constitute Great Britain have experienced rises in their private rental prices since 2011 (Figure 3). Since January 2011, rental prices in England have increased more than those in Wales and Scotland.
The annual rate of change for Wales (0.5%) in February 2017 continues to be well below that of England (2.3%) and Great Britain (2.1%). The annual rate of change for Wales has not reached 1% since March 2012 (Figure 4).
Rental growth in Scotland fell to 0.0% in the 12 months to February 2017, a slowdown from a high of 2.1% in the year to June 2015. This weaker growth may be due to stronger supply in Scotland as reported by the Association of Residential Letting Agents (ARLA).
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Private rental prices in the south and east of England are rising at a faster pace than those in the north (Figure 5). The largest annual rental price increases were in the South East (3.3%), unchanged from January 2017. This was followed by the East of England (2.8%), down from 3.0% in January 2017 and the South West (2.7%), down from 2.8% in January 2017.
The lowest annual rental price increases were in the North East (0.9%), unchanged from January 2017, the North West (1.2%), unchanged from January 2017 and Yorkshire and The Humber (1.5%), unchanged from January 2017.
Growth in London in the 12 months to February 2017 is now 1.9%, which is 0.2 percentage points below that of Great Britain (2.1%). An article by Savills focusing on London’s prime rental market notes that new build completions, buy to let investors and accidental landlords have led to high levels of stock available to rent.
Figure 6 shows the historical 12-month percentage growth rate in the rental prices of each of the English regions.
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The Index of Private Housing Rental Prices is now published on the second or third Tuesday of each month to bring it in line with other prices-related releases grouped under new “theme” days. This will increase the coherence of our data releases; for more information see Changes to publication schedule for economic statistics.
Aggregate weights information used for the IPHRP has been updated for 2017 and are published alongside this release.Back to table of contents
Details of the methodology used to calculate the 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 VOA, please see the article Explaining private rental growth. Comparisons of IPHRP against other private rent measures can be found in the article published alongside this release.
The IPHRP Quality and Methodology Information document contains important information on:
- the strengths and limitations of the data
- the quality of the output: including the accuracy of the data and how it compares with related data
- uses and users
- how the output was created
Contact details for this Statistical bulletin
Telephone: +44 (0)1633 456400