Rent growth slows across most of the UK, particularly London, latest index shows
Rent growth in London has slowed with annual growth of just 1.6% compared to 3.1% year on year in the rest of the UK, the latest index data shows.
It means that the gap between rent rises in London and the rest of the country is at its narrowest for 10 months, according to the index from HomeLet, and running at barely over half the rate in the rest of the UK.
Annual rental growth has now slowed in London for five months in a row and while London landlords are still seeing rent increases in cash terms, as rents in the capital are significantly higher than anywhere else, the HomeLet report suggests that they clearly feel unable to raise prices at the rates seen during the first half of the year.
Across the U, rents rose by an annual average of 3.1% but fell by 0.4% month on month to an average of £898. In London they fell by 1.3% month on month to £1,521. Excluding London rents increased 3.4% year on year and were flat month on month.
In Northern Ireland and Scotland the market has been more robust with average rents up 4.8% and 4.4% year on year respectively to £592 and £610. Rents also increased by 0.7% in Scotland month on month but fell 0.1% in Northern Ireland.
Wales has also seen reasonable annual rental growth at 2.4% but rents fell by 0.8% month on month to an average of £604 and the only other place to see rents rise month on month was the North West with an increase of 0.2% in November to take the average to £678.
Martin Totty, HomeLet’s chief executive officer, pointed out that rental growth has been slowing for a number of months. He believes it suggests that landlords understand that tenants have, or are, reaching an affordability ceiling, particularly given the uncertain economic climate.
HomeLet data shows that in the first half of the year rents across the UK consistently rose at rates above 4% with the London market recording a peak of 6.2% in March but since the summer months rental price inflation has slowed considerably.
He also pointed out that it is currently a time of unprecedented change in the rental market. A new 3% stamp duty charge was introduced on additional homes meaning buy to let landlords extending their portfolios now pay more in property tax.
Landlords have also had to cope with new checks on the immigration status of new tenants and now face tougher lending rules in 2017 as well as changes to tax relief on their buy to let mortgage payments and potentially increased costs if letting agents who are to be banned from charging tenants fees pass this on to landlords.
‘It is difficult to think of a period when there have been so many external interventions in the private rental sector. The impact of many of the changes are yet to be worked through and it’s unclear yet who will emerge as the winners and the losers,’ Totty added.