Private rents continue to rise faster than house prices, as landlords face mounting costs and regulatory uncertainty.
The latest Office for National Statistics (ONS) figures show UK private rents rose by 3.8% in the year to September.
That matches August’s rate and marks the joint-highest annual growth since December. Meanwhile, rents in England increased by 4%.
By comparison, annual UK house price growth slowed to just 0.9% in August, its weakest pace since March.
Industry commentators warn that limited supply, higher borrowing costs and regulation could keep rents rising.
Landlords passing on rising costs
Tom Bill, head of UK residential research at Knight Frank, blamed tight supply and growing regulatory risks.
He said landlords were increasing asking rents to offset potential costs linked to void periods and possession proceedings.
Furthermore, Bill warned that proposed Minimum Energy Efficiency Standards could force landlords to spend more on their properties.
Investment concerns threaten rental supply
Meanwhile, Alex Upton, managing director at Hampshire Trust Bank, said strong tenant demand was no longer enough to encourage investment.
“Continued rental growth highlights the pressure that remains on the private rented sector, even as the market becomes more balanced in some areas.”
He pointed to Rightmove figures suggesting rental supply remains constrained, particularly in London.
“The concern is that we are not seeing enough new landlord investment to make a meaningful difference to the availability of homes.”
As a result, higher borrowing and operating costs are forcing investors to reassess potential returns, according to Upton.
Landlords are increasingly considering long-term performance, refurbishment opportunities and alternative investment strategies.
In addition, he highlighted growing interest in houses in multiple occupation (HMOs), although these bring additional costs and management responsibilities.
“Without that investment, it will be difficult to make meaningful progress on rental supply, however strong tenant demand remains.”
Propertymark calls for measures to boost supply
Nathan Emerson, chief executive of Propertymark, said rising rents were adding to the financial pressures facing tenants.
“Rising rental prices continues to highlight the affordability challenges facing tenants, many of whom are already under significant pressure from the cost of living.”
However, he said landlords were also struggling to balance higher costs with tenant affordability.
Consequently, Emerson called for measures to encourage investment and increase the supply of rental homes.
Ultimately, the figures highlight a challenge for letting agents. Demand remains strong, but higher costs and uncertainty continue to constrain investment.
