Average rents edged up 0.2% year on year in Britain in 12 months to July

The average cost of a new let in Britain increased to £964 per calendar month in July but the pace of rental growth continued to slow to 0.2%, the latest lettings index shows.

Wales recorded the highest rental growth with rents up 4.9% year on year to 680, followed by the Midlands up 2.4% to £684 while the South West and the North both saw a rise of 0.9% to £1,042 and £638.

The index from Hamptons International also shows that rents increased on an annual basis by 0.7% in the East of England to an average of £950 per calendar month and by just 0.2% year on year on Scotland to an average of £649.

But in London rents were down by 1.6% year on year to £1,682, the second month in a row that they have fallen. Within Greater London rents fell by 1.7% in inner London to £2,582 and were down by 1.5% in outer London to £1,511.

‘Rental growth slowed to 0.2% across Britain in July. Falls in London were offset by higher growth in the rest of the country. Inner London experienced the greatest fall, with rents decreasing for the third consecutive month,’ said Aneisha Beveridge, analyst at Hamptons International.

This month’s report also looked at the number of overseas landlords in the lettings market and found that in the first half of 2018 the proportion of international based landlords in Britain fell to 6%, a record low.

Overall, the proportion of rental homes let by a landlord based overseas has halved since the first half of 2010 when the firm’s records began. In the first six months of 2010 some 13% of homes let in Britain were owned by an overseas landlord, more than double the proportion in the same period of 2018.

Over the last year the proportion of homes let by an international landlord has fallen a further 2%, a record low across Britain. But London has seen a pickup in international based landlords this year.

Indeed, the proportion of London homes let by an overseas landlord peaked at 20% in the second half of 2011, but fell back to 7% in the second half of 2017, the lowest point on record. However, unlike the British average, London saw a 5% rise in the proportion of homes let by an overseas landlord between the second half of 2017 and the first half of 2018.

In the first six months of 2018 some 12% of homes let in the capital were owned by an overseas based landlord, the highest proportion in the country. While at 3%, the East Midlands has the lowest.

Nearly half of international landlords are based in Western Europe at 44%, with 16% in Australasia, 14% in North America, 12% in Asia and 9% in the Middle East. But in London, 30% of international landlords are based in Western Europe followed by 20% from Asia.

According to Beveridge higher stamp duty and annual tax on enveloped dwellings (ATED) combined with a steady increase in foreign investors’ tax bills has led to a decline in foreign investment in buy to let. Overseas investors have also seen the removal of capital gains tax exemptions since 2015.

‘However over the last year, London has bucked the trend with a pickup in international landlords. Sterling’s depreciation, effectively offering international buyers a discount, combined with a softening London market, has helped offset the additional higher costs of owning a buy to let property in the capital for foreign investors,’ she said.