Brighton and Bristol recorded the highest rent increases in Britain last year, new figures have revealed.
According to Homelet’s annual review of the rental market, tenants living in Brighton and Bristol on average saw an 18% increase in rent.
Brighton has become the first city outside of London to break the £1000 barrier, with rents on average £1,078. Average rents in Bristol were £904, up from £767 in 2014.
Rent increases are currently being driven by the lack of housing stock as a result of demand exceeding supply.
One of the reasons for this is that first-time buyers are finding it increasingly difficult to get a foot on the property ladder due to the housing shortage and therefore remain stuck in the rental sector. This in turn increases demand for rented accommodation and combined with the shortage of available properties helps to push rents up.
Many experts also believe that the recent attack by the government on the buy-to-let sector will lead to an increase in rents as landlords look to recoup their money to cope due to the loss of income.
As part of the Autumn Statement last year, Chancellor George Osborne announced an increase in stamp duty of 3% for landlords and second home owners as part of the government’s efforts to dampen the buy-to-let market. The amount of tax relief landlords can claim on properties will also fall from April 2017.
Across the UK, excluding Greater London, rents were 4.9% higher than in 2014.
The average monthly rent outside of London now stands at £739, while rents in the capital rose 8% to an average of £1,523.
Birmingham and Leicester showed the smallest average increase in rent of 4% to £675 and £638 respectively.
Martin Totty, Barbon Insurance Group’s chief executive, said: “2015 was a year in which rents on new tenancies were up on 2014 in almost every area of the country. While we saw a moderation in the rate at which rents increased during the final months of the year, and even some falls in a number of regions, the sector overall has continued to see strong demand.”
“Beneath the headline figures, HomeLet’s data points to some significant variations in rental market performance in 2014, both from region to region and from town to town. In locations such as Brighton and Bristol, demand for rental property appears to have been particularly strong and rents on new tenancies jumped very markedly. In other areas, we saw slower growth.”
Figures from the HomeLet Rental Index showed that that rents on new tenancies agreed over the final quarter of 2015 fell in eight out of 12 regions of the UK compared to the previous year.
On an annual basis, rents rose in 10 out of 12 areas, led by London, where rents on new tenancies signed during the final three months of the year were 7% higher than in the same period of 2014.
Totty said: “Rents in London have continued to rise more quickly than in most areas of the country, but not at quite the pace of 2014; meanwhile, average rents outside of the capital rose more quickly last year than in 2014. As a result, we saw a narrowing of the rent inflation gap between London and the regions last year – is this a trend we will see continuing in 2016 from tenants seeking value for money in the private rented sector?”
UK towns and cities with highest rental market growth in 2015
| City/Town | 2015 | 2014 | % rise |
| Brighton | £1,078 | £913 | 18% |
| Bristol | £904 | £767 | 18% |
| Edinburgh | £819 | £707 | 16% |
| Newcastle | £588 | £506 | 16% |
| Greater London | £1,596 | £1,435 | 11% |
| Liverpool | £673 | £607 | 11% |
| Glasgow | £636 | £586 | £9% |
| Coventry | £754 | £699 | 8% |
| Leeds | £691 | £648 | 7% |
| Manchester | £727 | £691 | 5% |
| Nottingham | £586 | £556 | 5% |
| Belfast | £606 | £579 | 5% |
| Sheffield | £604 | £581 | 4% |
| Birmingham | £675 | £647 | 4% |
| Leicester | £638 | £611 | 4% |
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