Overall rental growth has stalled in Britain with values 0.6% lower in February than they were a year ago with the fall is driven by London, the latest index shows.
While it is the first annual fall for more than six years, the data from the Countrywide lettings index shows that apart from London and the South East where rents fell by 4.7% and 2.6%, rents continue to rise in the rest of the country.
Rents were up 0.8% when London is left out of the calculation but the rate of growth slowed in nine out of 11 regions and the East and West Midlands were the only regions recording faster rental growth in February than in January.
In February the average rent was £921 a month, £5 less than in February 2016 but rents are still £112 or 14% a month more than their previous peak in 2007 and it has taken seven months for falls in London and the South East to bring the national rental growth figure below 0%.
The index report says that the slowdown in average rental growth is driven by a fall in the number of tenants looking for a home combined with higher numbers of homes available to rent in London and the South East.
While there were 5% more tenants looking for a home than at the same time as last year in London there were 3% fewer and in the South East there were 5% fewer tenants looking than last year. There was more tenant demand in every other region of the country with the biggest increases in the East Midlands, the East and the North West.
The surge in the number of homes available to rent following the rush to beat the stamp duty deadline last year is now beginning to subside, according to the report. There were 10% more homes available to rent nationally in February 2017 than last year but the rate of growth has halved since last month.
London, the South East, the South West and the East of England were the only regions to record double digit growth in the numbers of homes available to let and the report explains that the increased level of stock available is likely to continue bearing down on rental growth in the coming months.
‘Rents are growing in most of the country but falls in London and the South East are dragging down the national growth rate. Recent falls in London and the South East are small in the context growth in recent years. Rents are a third higher in London and the South East than in 2007,’ said Johnny Morris, Research Director at Countrywide.
‘Early signs point towards 2017 being a rare year where rents rise faster in the north of the country than in the south. While rents are likely to track any increase in earnings, affordability in London and the South East remains stretched. That is likely to limit rental growth,’ he added.
