Residential rents outside London have risen faster than in the capital for the first time since 2010 with the gap steadily growing over the last five years, new research shows.
The average London rent fell 0.7% year on year on November, the sharpest fall since October 2010 but it still some 60% higher than in the rest of the country, although this is down from 62% in 2015, according to the data from the monthly lettings index from Countrywide.
The index report points out that over the last 12 months, London has gone from the region with the second fastest rate of rental growth in Great Britain to the slowest.
The gap between rents in London and the rest of the country reached a record £490 a month in 2015, up from £150 a month in 2010. But with rents in the capital now growing at a slower rate the gap has narrowed. By November 2016 the gap had fallen to £489 a month, the first fall since 2010.
According to Countrywide the narrowing gap between London rents and those in the rest of the country has been driven by a surge in the number of homes available to rent in the capital. In November there were 32% more homes to rent in London than 12 months ago while the number of would be tenants rose by just 9%. Over November the asking rent was cut on 11% of homes let in London, more than double the proportion in 2015 when it was 5%.
Across the country the cost of a new let rose by 2% over the last 12 months, or 3.1% if London is excluded and rental growth has been driven by the North East, the North West and Yorkshire and Humber. Taking these three regions together, rents have risen faster than in any other part of Great Britain. Some 25% of tenants renewing their contract in the North of England saw their rent increase in November 2016, up from 16% in the same month last year.
‘Higher than usual numbers of homes available to rent has boosted tenants’ negotiating power. Stock growth has outstripped that of tenants. This is in part due to the hangover from the rush to beat the 3% stamp duty charge earlier in the year and a shift in stock from the sales market,’ said Johnny Morris, research director at Countrywide.
‘With more choice and facing stretched affordability, many tenants are using their new found negotiating power to agree lower rents than in 2015,’ he explained.
‘Since the gap between London rents and those in the rest of the country hit a high watermark in 2015, the gap has been gradually narrowing. The pressure on affordability and number of homes coming onto the rental market in the capital means that rents are likely to lag behind the rest of the country in 2017,’ he added.
