Residential rents in UK reach record highs amid soaring interest rates

By Aysu Bicer

LONDON (AA) – The UK is experiencing an unprecedented surge in residential rents, with recent data from the renowned estate and letting agent, Hamptons, revealing that the average rent for newly let properties has skyrocketed by an astonishing 12% over the past year, marking the fastest rate of increase since the index's inception in 2014.

This comes as high-interest rates have made property purchases increasingly challenging, prompting sellers to slash their asking prices.

The average monthly rent for newly let homes in August soared to £1,304 ($1,616). This figure is a stark contrast to just under a year ago when it had first breached the £1,200 mark.

Aneisha Beveridge, head of Research at Hamptons, commented on the astonishing trends: "Each passing month has ushered in a new rental market record. Rents have risen more in the last 12 months than they did between 2015 and 2019. While the current pace of rental growth is unsustainable long term, many mortgaged landlords are being squeezed just as tightly as tenants."

The driving force behind this rental surge can be attributed to the prevailing high-interest rates in the UK over the past 20 months. Landlords, grappling with increased mortgage costs, have responded to raising rents wherever possible.

Beveridge added insight into the situation: "Higher rents are only going some way towards helping mortgaged landlords balance their books, rather than boosting their profit."

Meanwhile, the Bank of England is poised to announce its 15th consecutive interest rate hike this Thursday, increasing rates from 5.25% to 5.5%. This move is part of the central bank's ongoing efforts to combat inflation.

However, it may signal the end of the current rate-hiking cycle, as the bank's monetary policy committee expresses optimism that inflation will see a significant decline by the year's end.