The figures from the private housing rental index from the Office of National Statistics also show that rental prices grew by 2.8% in England, 0.2% in Wales and 0.6% in Scotland.
Rental prices increased in all the English regions over the year to March 2016, with rental prices increasing the most in London at 3.7%.
Since January 2011 England rental prices have increased more than those of Wales and Scotland. The annual rate of change for Wales at 0.2% continues to be below that of England and the Great Britain average while rental growth in Scotland has gradually slowed to 0.6% in the year to March 2016, from a high of 2.1% in the year to June 2015.
Private rental prices in England show three distinct periods with rental price increases from January 2005 until February 2009, rental price decreases from July 2009 to February 2010, and increasing rental prices from May 2010 onwards. When London is excluded, England shows a similar pattern but with slower rental price increases from around the end of 2010.
Since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3% year on year, with March 2016 rental prices being 2.8% higher than March 2015 rental prices. Excluding London, England showed an increase of 2.1% for the same period.
In the 12 months to March 2016, private rental prices increased in each of the nine English regions. The largest annual rental price increases were in London at 3.7%, down from 3.8% in February 2016, followed by the East at 3% and the South East at 2.9%, both unchanged over the same period. Annual price increases have been stronger in London than the rest of England since November 2010.
The lowest annual rental price increases were in the North East at 0.8% down from 0.9% in February 2016, followed by the North West at 1.1%, up from 1% and Yorkshire and the Humber at 1.2%, down from 1.3% over the same period.
According to Adrian Gill, director of lettings agents Your Move and Reeds Rains, rents will start to build a gradual but inevitable path, ultimately reaching the very peak of the market in the autumn.
‘Early spring is just the calm before the storm. Demand for homes in the private rented sector is driven by the flow of jobs and the flux of a generally more mobile workforce looking for a place to live,’ he said.
‘This reflects the strengths of private renting, the opportunity for young independent adults to strike out on their own, or for families to move across the country and earn the best possible livelihood. In the towns and cities with the biggest renting populations it is a constant struggle for supply from landlords to match demand from tenants. With a surge in jobs and local economic activity, rents rise. Keeping pace will not be easy, and will depend on the freedom to invest as a landlord,’ he explained.
He pointed out that new tax changes intended to benefit owner occupiers are now making it more expensive to become a landlord, at least for the time being. ‘Ultimately this will only punish tenants, driving out buy to let landlords will reduce supply leading to lower choice and higher rents for those that can least afford them,’ said Gill.
‘In particular, this month’s new stamp duty surplus has driven an extra wedge between those aspiring landlords planning to invest in additional homes to let, and those existing landlords who have already built up their portfolios. That difference will not last for long. But by making it more expensive to invest in property, it will hamper the healthy growth of the private rented sector,’ he added.
‘Over the longer term there will still be a sharpening shortage of homes available, and rents will rise in line with any extra costs so being a landlord will remain a profitable investment, though tenants will just see unnecessarily higher rents in order to price in the extra bill for the taxman,’ he concluded.
