Rental growth continues to slow across Great Britain, driven by the South of England with average rents up by just 1% nationally year on year and falling month on month, the latest index shows.
This was the slowest increase in October since 2010, meaning that the second half of the year has seen the market swing in favour of tenants with an average rent of £947, according to the index from Countrywide, down 1.7% month on month.
Indeed, month on month rents are down across the country apart from central London which saw a slight rise of 0.3%, taking the average rent to £2,475 a month. The biggest month on month fall was in the South East with rents down 4% to £1,150, followed by the North with a fall of 2.6% to £674.
In the South West rents fell by 1.8% month on month to £850 per month, in the East of England they fell 1.4% to £996 and in Wales there were down 1.1% to £688. Greater London and Scotland recorded a fall of 0.8% to £1,302 and £700 respectively while rents fell 0.3% in the Midlands to £702.
Year on year rents in most regions are still higher than in October 2015. The biggest annual decline is in the South East with a fall of 3% while central London and Wales also saw annual growth decline by 0.2% and 0.4% respectively.
The biggest annual growth was in Scotland where rents are up 4.6% compared to a year ago, followed by the East of England up 4.1%. The South West recorded annual growth of 3.7%, the Midlands 2.5%, the North 2.1% and Greater London 0.2%.
The Countrywide report also shows that tenants are renting smaller homes as the number of tenants with a spare room has fallen to the lowest level on record. Just 35% let a home with a spare bedroom in 2016, down from a peak of 59% in 2010.
In London, where rents are highest, just 26% of tenants were able and willing to pay for an extra room this year, slightly down on 2015 and the report points out that rising rents have pushed the cost of an extra bedroom to £295 a month.
While renters in London are least likely to have a spare bedroom, the figure is very similar for tenants in big cities across the South of England. Just 28% of tenants in Oxford, 27% in Cambridge and 24% in Bristol have a spare room.
But in cities further north like Newcastle, Manchester and Liverpool where the cost of an extra bedroom is much lower, tenants are nearly twice as likely to have a spare room while those living in city centre flats are a third more likely to have a spare room than their more suburban counterparts.
‘As affordability pressures have risen, for many tenants, extra space has become a luxury. Sacrificing extra bedrooms and sharing has helped renters to absorb higher prices. But those living in the South are close to a point where there’s not much more room to squeeze, meaning rental growth is likely to be capped by tenants incomes for some time,’ said Johnny Morris, director of research at Countrywide.
‘The second half of 2016 has seen the rental market slowly swing towards the tenant. The pace of rental growth has slowed throughout the year. October was the first time in over two years the cost of renting a home didn’t rise faster than the rate of inflation,’ he added.
