National rental prices up across the UK, latest index shows

National monthly rents in the UK increased 8% annually in December to £763, in spite of a seasonal dip of 2% on month, the latest rental index shows.

The data from Sequence also shows that the number of new tenancies agreed increased 13% annually, highlighting the strength of the market compared to last year.

In London average rents increased annually by 3% to £1,417 despite a fall last month of 3% and the number of new tenancies in London was up 11% annually, slightly less than the UK average.

Buy to let mortgage applications remained strong, up 17% annually, as investors continued to enter the market and the firm says that as a result of the growing number of buy to let investors, the number of new rental properties coming to market is up 6% annually.

‘There is a common misconception that when the sales market is booming the rental market lags behind, but our figures disprove that theory entirely. The annual growth of rents across the UK highlights just how far the rental market has come in 2013 and with transactions up 13% annually it is clear that the demand for rental property is stronger than ever,’ said Stephen Nation, head of lettings for Sequence, a 300 branch network which also includes Barnard Marcus, William H Brown, Fox & Sons.

‘Buy to let mortgage registrations remain high, up 17% annually, and we are now seeing the tangible effect of this buoyant mortgage market with an increase in new properties for rent. The increase in the supply, up 6% annually, is being met with an 8% rise in new tenant applications or demand, which represents a very healthy and balanced market,’ he explained.

‘Indeed, this strong growth in supply is carrying on into 2014, with the first two weeks of the year seeing a 6.5% increase, on month, in new properties available to rent. Demand is continuing to keep pace with supply so I would predict the number of transactions to increase significantly as the year progresses,’ he added.

Meanwhile, the latest figures from the Office of National Statistics, which is part of an experimental index started in January 2011 that is currently undergoing evaluation, show that in the 12 months to December 2013 private rental prices paid by tenants rose by 1%, down from a 1.1% increase in the 12 months to November 2013.

Rents were up 1% in England, 1.3% in Scotland and 1.2% in Wales. In England rents increased the most in London at 1.6%.

The index measures the change in price of 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 advertised rental prices.