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A shortage of available rental properties is among the main upwards pressures on bills but it is hoped that the peak is near.
By James Sillars, Business reporter @SkyNewsBiz
The pace of private rental bills hit a new record high last month, according to official figures charting the impact of rising interest rates on the housing market.
The Office for National Statistics (ONS) measured UK rental prices, in a provisional estimate, rising at a rate of 6.1% in the 12 months to October.
That was up from the 5.7% reported in the year to September and the highest rate since records began in 2016.
In a regional breakdown, Wales saw the strongest leap over the annual period – running at 6.9%.
That was followed by London at 6.8% with Scotland’s rate running at 6.2%.
Average prices paid by tenants stood at 6% in England, the ONS said, with North East England seeing the weakest decline among the regions of 4.7%.
Wider house price data, which lags the rental figures, showed a decline in prices of 0.1% over the 12 months to September.
It marked, the ONS said, the first annual decline in prices since 2012 – a statistic that mirrored findings by mortgage lenders on the state of the market at the time.
The rental and housing market price activity reflects the impact of interest rate rises, imposed by the Bank of England since December 2021, to tame inflation.
Raised borrowing costs have filtered through to landlords and new mortgage customers alike.
Apparent racism in rental market
But more recent data has suggested that the Bank’s decision to pause its interest rate cycle in September is starting to have an impact.
Fixed mortgage costs are slowly retreating from levels way above 6%, helping activity and prices to return to month-on-month growth according to the most recent reports from Nationwide and the Halifax.
Read more:
70 British local authorities where house prices have risen, bucking overall trend
The picture for rents is less clear but growing expectations that Bank rate will not be raised again, due to continued progress in the battle against inflation, mean that there is hope rental price growth may be nearing its peak.
A big stumbling block, however, continues to be a lack of supply with agents reporting fierce competition for rental properties becoming available.
Charities warn that despite the easing of inflation, families will continue to face an evolving cost of living crisis this winter as bills for energy, food and housing remain well above pre-COVID levels.
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