Renters continued to be squeezed by near-record annual rates as average UK private rents increased by 8.6 per cent in the year to June 2024, according to latest figures.

It came as the new Government announced it would introduce a Renter’s Rights Bill, a move it says will protect renters struggling with their bills through the removal of no-fault evictions and providing avenues to challenge unaffordable rent rises.

The Government also promised to publish draft legislation on reforming leasehold and commonhold. 

The average private rent in Britain was £1,271 per month – £101 higher than 12 months earlier, according to data from the Office for National Statistics (ONS). While the rate of increase slowed from 8.7 per cent in the 12 months to May 2024, average rents increased to £1,310 (8.6%) in England, and £959 (8.4%) in Scotland and by 10.3% in Northern Ireland in the 12 months to April 2024, the latest data available.

Within England, rents inflation was highest in London (9.7%) and lowest in the North East (5.9%), in the 12 months to June 2024.

In Wales, where the resignation of Vaughan Gething as First Minister has delayed the Welsh Government’s proposed white paper on fair rents and adequate housing from the summer to the autumn, average rent rose 8.2 per cent to £743.

A lack of rentable accommodation at a time of increased demand is driving the surge in rent increases. Experts do not believe rent inflation will significantly ease soon. The Royal Institution of Chartered Surveyors (RICS) reported that tenant demand increased during June, but landlord instructions decreased, pointing to a renewed decline in rental listings, in its June 2024 UK Residential Market Survey.

Grant Fitzner, chief economist of the ONS, said: “Rental price rises slowed slightly, but remain near record annual rates across the country. Within England, London continued to see the strongest growth in rents, with the North East the lowest.”

Nathan Emerson, chief executive of Propertymark, the property professionals group, said: “There has been much insecurity across the rental market over recent years due to aspects such as uncertainty surrounding the Renters’ Reform Bill, increases in taxes, and a lack of clarity regarding regulation.

“In real terms, this anxiety has impacted new investment and, in extreme cases, has even prompted landlords to leave the sector, further compounding the issue surrounding available housing stock.

“The rental sector urgently needs investment to keep pace with demand, and Propertymark is keen to see the UK Government closely review all elements and generate new legislation that promotes investment but, above all, provides full fairness to both landlords and tenants alike.”

Chris Norris, policy director for the National Residential Landlords Association, warned the reforms must not further undermine the paucity of potential rental homes. “With an average of 15 households chasing every available home to rent, it is vital that reforms must not further undermine the already-poor supply of potential rented properties,” he said.

The reforms need to be “fair, workable and sustainable for both responsible landlords and renters”, which means fixing “a broken justice system which too often fails those reliant upon it”, he added.

“The Housing Minister has rightly noted that landlords need the courts to operate quickly where they have a good reason to repossess a property. This includes cases of tenant antisocial behaviour and serious rent arrears, which currently take almost seven months to process. This is far too long.

“Tenants are no better served by delays, which increase hardship, stress and uncertainty. We need action from the Government, alongside the Bill, to ensure all are able to access justice in a timely fashion when they need to do so.”

Polly Neate, chief executive of Shelter, said the proposals would “restore hope to England’s 11 million renters, whose lives have been plagued by no fault evictions for decades”.

She added: “The new Renters Rights Bill has to be a fresh start at reforming broken private renting. Not only does this mean urgently scrapping no-fault evictions, but also setting clear limits to in-tenancy rent increases. The Government cannot allow landlords to continue to force tenants out of their homes with eyewatering rent hikes.

“If this Government truly wants to deliver the biggest increase in social house building in a generation, any new planning legislation must be focused on delivering 90,000 social rent homes a year.

“Private developers will not deliver the target of 1.5 million homes by themselves – councils need the means to build genuinely affordable homes too. Otherwise, their plans will fail, like countless governments before them, and homelessness will remain at a record high.”

Matt Hartley, of the Money Advice Trust, the charity behind National Debtline and Business Debtline, said ministers were “right to prioritise the Renters Rights Bill, which will ensure renters struggling with their finances are protected from unfair eviction”.

“However, with 6.8 million people struggling to pay for essentials, we also need to see a clear plan to help people afford the basics, including improving support under universal credit.”

Average UK house prices rose 2.2 per cent in the year to May, according to the ONS. This was an acceleration from 1.3 per cent growth in the 12 months to April 2024. The average UK house cost £285,000 in the 12 months to May 2024, the ONS found.

“House price growth continues to increase, hitting its highest annual rate since March 2023. Yorkshire saw the highest annual growth, with London still the lowest, though the capital saw an annual rise in prices for the first time in a year,” Fitzner said.