London saw private rental prices soar 6.9 per cent on average in 2023, the Office for National Statistics (ONS) reports.
It's the highest annual hike since the ONS began collecting data on London rents in 2006.
Londoners now account for a third of the money spent on private rental homes across the UK.
A recent report from Hamptons estimated that London renters spent a record-breaking £32.1 billion on housing in 2023.
The ONS Index of Private Housing Rental Prices recorded the rise of 6.9 per cent year-on-year from November 2022, up from last month's estimate of 6.8 per cent.
The ONS Index of Private Housing Rental Prices records rents from both existing tenancies and newly advertised ones, but on the whole rent rises will have been steeper for those moving to new rental accommodation.
"This underestimates the reality many renters face, in particular the one in four who move each year, as rental price increases for new tenancies are often at least double this figure," said Anna Clare, CEO of GreenResi.The ONS reported the reason behind this steep increase was a lack of supply in rental accommodation, coupled with high demand from prospective tenants.As mortgage rates spiked due to successive interest rate rises, more people are having to remain in rental accommodation over buying a home. The Hamptons report estimated that many Millennials will be renting into retirement if current trends continue.
North London estate agent Jeremy Leaf said the rises were unsurprising due to the shortage of stock, but warned Londoners may not be able to absorb any more rental inflation.
"We have noticed in our offices a reluctance to keep chasing up rents and an affordability ceiling finally having an impact on many tenants," said Leaf.
"The result is a bit of a stalemate, with tenants trying to renew at or close to previous levels and trying to find compromises with landlords struggling in many cases with higher loan repayments."
The cumulative effect of continuously rising rents has made renting in London increasingly unaffordable, particularly during the cost-of-living crisis. Savills has estimated that London rents have risen 31 per cent since 2021, with rent accounting for up to 42.5 per cent of people's incomes on average.
Rents are forecast to keep rising for London in 2024 but less steeply, with Zoopla predicting a two per cent increase in asking rents.
Rent inflation happened all across the UK in 2023.
Wales saw the biggest annual jump, with private rental prices up 7.3 per cent in the 12 months to November 2023.
In Scotland, private rental prices rose 6.2 per cent, despite the Cost of Living (Tenant Protection) Act that passed in 2022 capping in-tenancy rent rises at 3 per cent.
In England, excluding London, rent inflation resulted in a 5.7 per cent rise year-on-year.
