Rents for new lettings in Britain increased by 2.4% year on year in January to an average of £958, unchanged from December, the latest monthly lettings index shows.
The annual growth was led by Greater London with rents up 3.3% compared to January 2017 to £1,704, followed by growth of 2.7% in the South West and the Midlands to £787 and £669 respectively.
The Countrywide index also shows that rents increased by 2.1% in the north of England to £623, by 1.8% in the South East to £1,042, by 1.1% to £646 in Wales, by 0.6% in Scotland to £624 and at £925 were unchanged in the East of England.
Excluding London, average rents across Britain rose 1.9% compared to annual growth of 2% in December and the North East was the only region to see rents fall.
‘The rental market grew in 2017. More people joined the rented sector and average rents increased, meaning 2017 saw the highest total rent bill so far,’ said Johnny Morris, research director at Countrywide.
‘As millennials age, more are becoming homeowners, so the total amount they’re paying in rent has started to drop. But the Generation Rent title still applies. Any fall will be much smaller and slower than seen by previous generations as less become home owners,’ he pointed out.
He also pointed out that for the second month running rental growth in London has outstripped the rest of the country. ‘Stabilising rents in central London alongside rises everywhere else in the capital has pushed the rate of rental growth to the highest level for 22 months. While the rate of growth outside London remains higher than for most of last year, it has picked up to a lesser extent. Across northern England rent rises are running at half the rate of 2017,’ he added.
The monthly report also shows that tenants paid a record £51.6 billion in rent last year, an increase of £1.8 billion on the previous year and more than twice what they paid in 2007.
It say that this has been driven by both rising rents and an increase in the number of households renting. Despite average rents falling in 2008, the total amount of rent paid by tenants has risen in every year for the last decade as the number of people renting has grown.
For the last 11 years millennials, those born between 1977 and 1995, have been paying the majority of total rent. In 2017 they paid 59% of all rent, a total of £30.2 billion but this was down from a peak of 64% in 2015 when they paid £31 billion.
Today millennials account for a similar proportion of rent as they did in 2011 and as more millennials buy their own home, they will account for a shrinking proportion of the total rent paid, the report suggests.
While together the two youngest generations make up the largest proportion of the rental market, older renters still make up a significant proportion of tenants, it also points out.
Despite a high proportion of baby boomers born between 1946 and 1964 owning their own home, many still rent. Last year this age group paid £5.5 billion, some 10% of all rent, the same as generation Z born after 1995.
The report says this can be explained by the fact that on average individual baby boomers tend to rent larger homes in more expensive places and pay more each month than any other generation.