The private sector lettings market in Britain has been steady over the last 12 months with the average cost of a new let up 0.7% to £956 per calendar month in June, down from 1.3% in May, the latest index shows.
However, it is the first time annual growth has fallen below 1% for seven months. The biggest annual growth in rents was in Wales with a rise of 4.1%, followed by the East of England up 2.3%, the Midlands up 2.2%, the South East up 1.9% and Scotland up 1.1%.
Rents in the North and the South West were flat year on year and fell by 0.4% in Greater London, down by 0.5% in Outer London and down by 0.3% in Inner London, according to the Hamptons International lettings report.
The report also shows that more rented homes are owned by landlords incorporated as a company, suggesting they have reacted to tax changes. The number increased to 18% in the first half of 2018, the highest since the Hamptons index began in 2010, and up 4% compared to the first half of 2017.
According to the data the numbers have been steadily rising since the first half of 2015 when the Chancellor announced changes to tax relief on rental properties in the Budget. The changes meant that it can be more tax efficient, in some cases, for landlords to own their buy to let portfolios through a company rather than hold as a personal asset.
Yorkshire and the Humber had the highest proportion of rented homes owned by a company landlord at 25%, followed by 20% in the North West and 19% in London. Last year, London topped the list but has since fallen back.
The research also suggests that company landlords are more likely to rent out cheaper homes than individuals. Some 35% of homes let by a company landlord cost under £500 per calendar month compared to 19% of homes let by individuals. Only 2% of homes owned by a company landlord were let for more than £2,000 per calendar month so far in 2018. One in 10 rented homes owned by a company landlord were registered overseas.
‘The number of rented homes owned by company landlords continues to rise, almost double the proportion in 2015. Companies are generally taxed more favourably, so in many cases landlords can make cash savings by operating through a company rather than as an individual,’ said Aneisha Beveridge, analyst at Hamptons International.
‘Rental growth slowed in June, falling below 1% for the first time in seven months as the shortage in stock begins to level out. The lull in landlord purchasing activity following the stamp duty surcharge for second homes appears to have bottomed out as investors find new ways to make their returns,’ she added.
