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Average monthly rents in Great Britain have increased by £74 in the last year, as landlords continue to exit the market.
A new report shows that landlords are buying far fewer homes than before, resulting in tenants having less choice and facing higher costs.
Read on for more about what's happening to rent prices, and how the new government plans to overhaul the rented sector.
Landlords bought just 10% of homes sold in Great Britain in the first half of 2024, according to research by the estate agency Hamptons.
This is the lowest percentage since Hamptons started keeping records in 2010, which reflects how buy-to-let has become less attractive in recent years.
Buy-to-let purchases in London have dropped by the biggest percentage, from 17% of purchases in 2015 to just 8% in the first half of this year.
Hamptons estimates that by the end of this year, landlords will have sold 327,000 more homes than they've bought since 2016.
There are several factors behind this.
Before 2017, landlords could offset their mortgage interest payments when calculating their taxable profit.
However, this tax relief was phased out between 2017 and 2020 before being replaced by a flat 20% credit, which remains in place today.
The changes have left landlords with much higher tax bills, and resulted in many selling their buy-to-let properties.
Landlords have also experienced a series of policy changes, U-turns and red tape over the past few years.
The previous government's Renters Reform Bill failed to pass through parliament before the election. The bill included a series of changes to the rented sector, including plans to eventually abolish Section 21 'no fault' evictions. In simple terms, it would have made it harder for landlords to evict tenants.
The new government is planning to introduce its own reforms under the Renters' Rights Bill. Full details are to follow, but the Bill will also include the abolition of Section 21, alongside plans to enable tenants to challenge rent increases and stop bidding wars taking place.
Landlords have also experienced uncertainty over energy efficiency rules. The previous government had long planned to require landlords to improve rented homes to achieve Energy Performance Certificate ratings of 'C' by 2030, before suddenly dropping the plans last autumn. Earlier this week, the new government confirmed it would adopt similar energy plans, with full details to follow 'in due course'.
High mortgage rates are currently the most tangible barrier to buy-to-let investment.
Landlords who locked in five-year fixes back in 2019 were able to get average mortgage rates of around 3.2%. Now, that figure is just under 5.5%.
This additional cost means some landlords will consider selling properties rather than remortgaging, or keep them and raise rents to cover the shortfall.
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All of this adds up to a difficult picture for both landlords and tenants, with profits squeezed for one and rents rising for the other.
A recent survey of 2,000 landlords by the TDS Charitable Foundation found that 60% had increased the rent on at least one of their properties in the last year.
The most common reasons for increasing rents were as follows:
Of those landlords who chose not to increase rents, half said this was due to concerns that their tenants wouldn't be able to afford higher payments.
Hamptons says the North East of England is the only region where the proportion of homes being bought by landlords has increased between 2015 (24% of homes) and 2024 (25%).
The region's low property prices mean a lower outlay for landlords and better overall yields.
At local authority level, Sunderland (45%) and Middlesbrough (43%) have seen by far the biggest proportion of properties bought by landlords this year.
At the other end of the table, Scotland has the lowest, with just 5%.
Hamptons says a combination of tighter rental regulations and the stamp duty surcharge introduced in 2022 have made Scotland less attractive for investors.
Hamptons says the average rent paid on a new letting has increased by just under 6% in the past year, meaning renters are now paying an average of £74 a month more than a year ago.
Scotland saw the biggest percentage rise (11%), while London recorded the smallest (3%). The table below shows average rents across Great Britain.
| Region | Average monthly rent (June 2024) | Year-on-year change |
|---|---|---|
| Scotland | £962 | +11% (£96 a month more) |
| North of England | £927 | +10% (£84) |
| Midlands | £975 | +9% (£76) |
| East of England | £1,281 | +7% (£84) |
| Wales | £818 | +7% (£52) |
| South East | £1,425 | +6% (£83) |
| South West | £1,175 | +5% (£57) |
The government's upcoming Renters' Rights Bill aims to improve things for tenants.
The government says it is 'determined to address the insecurity and injustice that far too many renters experience'.
The Bill is still in the draft stages, but the government has already outlined some of its intended measures. These include:
While these moves will hopefully bring greater security for tenants and stop rents spiralling, they're unlikely to dramatically bring down costs.
Supply remains the biggest issue. Data from the property portal Zoopla shows 15 households were competing for each rented home on the market in June.
Aneisha Beveridge of Hamptons says: 'The lack of supply is one of the main factors underpinning strong rental growth and this is unlikely to reverse any time soon.
'The challenge for the new government is to increase security and the quality of homes for tenants living in the rental sector without disincentivising or pushing out more landlords.'
If you're struggling to pay your rent, it's important to contact your landlord as soon as possible, ideally before you miss a payment.
Your landlord may be willing to discuss a compromise to help you get on top of your finances. You may also be able to apply for support from the government if you're struggling with debt.
See our guide on what to do if you can't pay your rent for more advice.
If your tenant is struggling with their rent, there's not always a need to take formal steps straight away.
Instead, you might consider discussing short-term measures to help get them back on track, or consider offering a repayment plan if they've missed a payment.
If you do need to take legal measures, you can find out the process you'll need to follow in our guide on how to deal with rent arrears.
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