Help to Buy property scheme affecting rent rises in most of the UK
Residential property rents are stabilising across the UK as owning property becomes more affordable with the Help to Buy scheme, research suggests.
The average advertised rent fell in almost every region in the third quarter of 2013, reaching £965 per month compared with a high of £970 but rents in Greater London continue upwards, according to the latest rental index from Move with Us.
The reductions in most regions are tied in with the launch of Help to Buy scheme which is starting to impact the rental market. ‘Those who would ordinarily rent are opting to buy, putting downward pressure on rental prices as demand reduces. With this in mind, we anticipate further falls in advertised rents in the coming months, as the market starts to stabilise and reverse the over inflated rental prices that we have seen in the past few years,’ said Robin King, director at Move with Us.
‘Greater London is the anomaly of the last quarter as the only region to have seen significant rises in average asking rents, further proof that it operates in its own bubble separate to the rest of the UK. Rents in the capital have increased by £55 over the third quarter, the strongest period of prolonged growth for over 12 months,’ he explained.
‘With the Help to Buy scheme providing tenants with a real alternative to renting a property, landlords should look to protect their rents and maximise yields by offering well maintained properties with added benefits, such as a fast WiFi connection as part of their tenancy agreement. They should also ensure their properties are energy efficient to help keep bills down and ensure early compliance with 2016’s regulation changes,’ he added.
After hitting a low of £2,149 per month, average rents in London increased sharply in August to £2,210 per month, the highest level recorded since the fourth quarter of 2012, the index shows.
The growth in London is in contrast to the declines in both East Anglia and the South East’s advertised rents which had previously prospered from the high rental prices in the capital, and the close proximity to the social and work opportunities London provides.
In line with the majority of the regions in Britain, rents in the South West fell in the third quarter of 2013, continuing the trend which began in February this year following a peak of £815 at the end of 2012. In the third quarter rents fell by a further 1.32% from the end of the previous quarter, to £779 per month. The gradual decline in average advertised rents in the region since the start of the year has resulted in a market where the average rent is now lower than rates were in October 2012.
In the third quarter of 2013 average advertised rents in the South East declined for the first time in 12 months falling by £14 or 1.24% to £1,134 per month. The growth experienced in the second quarter of 2013 continued throughout July before hitting a peak in August and beginning to tail off sharply in September. As a result advertised rents fell by nearly £30 in two months. However, given the strong increases leading up to this quarter, rents still remain up by £26 or 2.37% in a year on year comparison.
Average advertised rents in East Anglia have grown steadily in line with those of the South East but in contrast, have remained stable throughout the third quarter of 2013 with a marginal decline of just 0.03%. Rents in the quarter have both increased and decreased, albeit within a range of £8. The average advertised rent in East Anglia is £894 per month, up by £21 against the same time 12 months ago.
Rents in the East Midlands fell for the third successive quarter after the peak of November 2012, when average advertised rents reached £644 per month. The decline seen throughout the third quarter of 2013 has been more moderate than in previous months having fallen by just 0.91%, indicating that rents are beginning to stabilise. Average advertised rents remain £15 up on 2012, and the market remains more buoyant than in July 2012 when rents hit a low of £585 per month.
The fluctuation in average advertised rents has continued throughout the past three months but returning to a stable rental price of £657 per month at the end of September. Rents in August reached a 12 month high of £661 before dropping off slightly the following month. The change in advertised rents between the beginning and end of the quarter was just 0.19%. The West Midlands remains the most consistent region in Britain over a 12 month period as rents have fluctuated by no more than £13, indicating a stable region.
Average advertised rents in Yorkshire and Humber fell to a 12 month low point of £590 per month throughout the third quarter, with a decline of 1.85%. This indicates that there has been a degree of stabilisation although the regional market is struggling after a strong end to 2012. Advertised rents in the region remain the cheapest in Britain having fallen by over £10 in the third quarter of 2013. Yorkshire & Humber is the only region where average rents are below the £600 per month mark and the downward trend would indicate that this is not expected to change in the next six months.
The strong growth in the region’s rental market at the end of 2012 has been met with three successive quarters of decline in 2013. This is a picture which has been mirrored throughout the whole of the North of England. The softening of rental prices in the second quarter of 2013 which suggested the stabilisation of rents in the region has been reversed by a three month period in which rents have fallen by approximately £15. As such, average advertised rents in the region are down on those of 2012 by just 0.27% suggesting the market has found its natural level.
As with the North West, advertised rents in the North East have dropped by approximately £15 over the quarter. The peak of November and December of last year appears to have created artificial expectations that the market was set to increase and the return to rents similar to those of last year would suggest, as with the North West, a more appropriate price level.
The stability of the second quarter of 2013 carried on into July and August before the market turned in September and average rents fell by 2.68% to end the quarter on £660 per month, £18 less than the start of the third quarter. Rents in Scotland peaked in a similar fashion to the rest of the North at the start of the year but in contrast, rental prices have remained strong and it was only in September that the market took a downward turn.
In Wales average advertised rents grew steadily during the first month of the third quarter before falling during August and September to an average of £625 per month. This figure is the lowest average advertised rent recorded for 12 months having grown from £600 per month last summer to peak at £681 per month between November and December last year.