Tenants across Great Britain paid a record £85.6bn in rent in 2023, equivalent to the total value of all homes sold in London last year. Double-digit rental growth means the total rent bill has increased by £8.0bn over the last year from £77.6bn in 2022, marking the biggest annual jump on record.
The total rent bill is now more than double what it was in 2010 (£40.3bn), partly because the number of households renting has increased by 25% or 1.1m over that period and partly because rents have risen too.
The average rent on a newly let home in Great Britain rose to £1,348 pcm in November, up 10.2% or £125 pcm on the same month last year. This marked the 7th double-digit increase over the last 12 months and the strongest annual rate of growth recorded in any November since our records began in 2014. Today, the average rent on a home in Great Britain costs 55% more than it did a decade ago.
Millennials (born 1980-1994) continue to dominate the rental market. They spent a record £36.9bn on rent in 2023, reversing the falls recorded between 2016 and 2020 when more Millennials became homeowners.
In 2016, Millennials made up a record 58% of all rented households. That figure then fell to a low of 42% in 2021, before rising again to 44% in 2023 as higher rates have limited their ability to buy a home.
If rates had stayed low, we would have expected the total rent bill paid by Millennials to continue falling since 2020. But strong rental growth and a tougher affordability backdrop has kept the tail end of millennials renting for longer. They’re also starting their own families and renting larger, more expensive homes which is pushing up the amount of rent they pay. However, with the average millennial aged around 35, we’re approaching the point where those who haven’t bought will likely be renting into retirement.
Meanwhile as Generation Z (born 1995-2012) continue to leave home, more are becoming renters. They spent £30.5bn on rent in 2023, £6.3bn more than in 2022 which marked the biggest annual increase of any generation. They made up just over a third (36%) of all renters this year, up from 1% a decade ago.
Gen Z are set to start paying more rent than millennials in the next couple of years, but that crossover is now likely to come later and at a higher point due to an era of higher interest rates.
Generation X (born 1965-1979), Baby Boomers (born 1946-1964) and the Silent Generation (born 1925-1945) all saw their rent bill fall, albeit marginally, in 2023. This was driven by small numbers becoming homeowners later in life, rather than them paying less rent each month.
London has seen the strongest rental growth over the last year. The average rent in the capital rose to £2,415 pcm in November, 11.8% or £255pcm more than the same time last year. Consequently, tenants in the capital paid a record £32.1bn in rent this year, up from £28.7bn in 2022 and £17.5bn a decade ago. This means that the total rent bill in London is bigger than the bill in the North of England, Midlands, Wales and Scotland combined (£29.4bn).
Rental growth in London continues to be driven by Inner London. Here, rents on new tenancies grew 13.2% last month. Beyond the capital, the Midlands where rents grew 10.9% year-on-year, overtook Scotland as the second fastest region for rental growth last month.
However, rental growth across Great Britain continued to cool a little from its 12.0% peak in August. Seven of the eleven regions in Great Britain saw the pace of rental growth slow last month. Scotland and the South East saw the biggest monthly slowdown. Even so, rental growth has not decelerated as much as we expected given landlords’ rising costs and a lack of homes available to rent.
