Residential rental growth in the UK is showing signs of easing with rents up 0.09% in September, down from the 0.12% recorded in August, the latest index figures show.
Overall rental prices are still up 1.65% year on year to an average of £1,187 per month. But in London it is a different story with the average rent down by 0.04% month on month and just 0.67% above a year ago at an average of £1,891 per month.
The latest Landbay Rental Index also show that rental growth is stronger in Scotland with month on month growth of 0.21% and up 1.79% compared to a year ago to an average of £720 per month. In Wales rents are up 0.08% month on month and 1.34% year on year to £632.
In England rents were up 0.09% month on month and up 1.66% year on year to an average of £1,219 per month. Overall when London is excluded from the national figures rents were up 0.17% month on month and 2.2% year on year with an average of £747.
A breakdown of the figures show that rents for one bedroom properties are doing better as demand for smaller rental properties remains buoyant. Around the UK, Scotland saw the greatest rental growth for one bedrooms, up 0.36% in September, closely followed by East England at 0.35% and the East Midlands at 0.29%.
London was at the other end of the scale with rents for one bedrooms flat in September, while the average rent for a one bedroom property in the UK grew by 0.12% in September and 1.57% year on year.
John Goodall, chief executive officer of Landbay, pointed out that the figures make interesting reading just after Housing Minister Gavin Barwell called for lower minimum space requirements for new build properties, to improve affordability for first time buyers.
He believes that with rent payments remaining the main financial pressure for aspiring home owners, and 1.8 million new households expected to rent rather than buy by 2025, the continued growth in one bedroom rents demonstrates how important it is that the buy to let sector is not overlooked in the provision of new affordable housing.
‘Housing has been high on the political agenda this week, and it seems that policy makers are resolute in their ambitions to make home ownership more affordable for people across the UK. There’s no denying most people aspire to own their own home, but it’s critical that efforts to bolster the countries housing stock don’t overlook the importance of the buy to let market for a supportive and sustainable housing market,’ said Goodall.
He explained that this week’s forecast from the Royal Institution of Chartered Surveyors (RICS) that 1.8 million more households will be looking to rent by 2025 is a stark reminder of the scale of future demand for the rental market.
‘The fact remains that those building up toward a house purchase rely on a well-served buy to let market to ensure that excessive rental growth doesn’t dampen their purchasing power. The challenge is exacerbated by record low interest rates, which may make mortgage borrowing cheaper for those able to buy a home, but also mean that house prices, and indeed rents, are growing more quickly than the money they have saved in bank and building society accounts,’ Goodall explained.
‘The overall picture is one of moderating rents, which is good news for those in shared accommodation, but an under supply of one bed properties will continue to restrict the ability for aspiring home owners to save up for a house of their own,’ he added.
