Private sector rents rise by 1%

Private sector rents in London increased at eight times the pace of those in the North East over 2013, official figures show.

Private sector rents across Britain rose by 1% in the year to December, new figures show

Every region across Britain saw an annual rise in average rental prices paid by tenants, with London recording the biggest increase over the last 12 months at 1.6% and the North East seeing the smallest at 0.2%, according to the report from the Office for National Statistics (ONS).

Across Britain as a whole, rents rose by 1% in the year to December - an increase which is half the consumer prices index (CPI) rate of inflation, which fell back to the Bank of England's target of 2% in December.

The figures also show that despite London being the region with the strongest annual growth in rental prices, rents have risen at a faster rate in Scotland and Wales than they have in England over the last year.

In the year to December, private rental prices grew by 1.3% in Scotland, 1.2% in Wales and by 1% in England. If London, with its large volume of rental property, was taken out of the figures, rents would have only increased by 0.7% across England and by 0.8% across Britain over the last year.

The report said that until April last year, the annual pace of rental increases had been higher in England than in Scotland or Wales, but the rate of change has been picking up in Scotland and Wales since late 2012.

Within England, the South East has seen the next strongest growth in rents after London, with a 1.0% annual increase, followed by the South West, which saw a 0.9% rise.

The Northern regions saw the slowest growth in rental prices, with a 0.3% annual rise recorded in the North West and a 0.4% increase over the last year in Yorkshire and the Humber.

Fears have grown in recent years that tenants who have been "trapped" in the rental sector because they do not have enough cash put by to make the jump onto the housing ladder have been burdened with strong rental increases amid high demand for rental properties.

But there have been signs of more people finding themselves in a position where they are able to move out of the rental sector, with Government support schemes such as Help to Buy resulting in some strong increases in first-time buyer numbers.

The ONS rental figures were released as the British Bankers' Association (BBA) reported that the number of mortgage approvals granted to home buyers climbed to a six-year high in December.

The 1% annual rise in rents recorded across Britain in December marks a slight cooling in rent rises, compared with a 1.1% increase recorded by the ONS in the 12 months to November last year.

The index is part of an ''experimental'' series of reports started by the ONS last year to shed more light on how the rental market is evolving across Britain. It takes data from the Scottish and Welsh governments as well as the Valuation Office Agency to regularly measure the change in the price of renting a home from a private landlord. The index is still undergoing evaluation and is likely to be developed further, the ONS said.

Lettings network LSL Property Services, which owns chains Your Move and Reeds Rains, also said recently that it has seen a slowdown in the annual pace of rent increases.

LSL said that private sector rents stood at £745 per month in December across England and Wales, marking a 1.5% year-on-year increase. By comparison, LSL sid it saw rents increase at a much higher rate of 3.2% in the year to December 2012.