Rental growth in Britain continues to slow and falls in London for first time since 2010
Rents in Britain increased by 1% in the 12 months to May 2018, unchanged from the previous months with rents falling in London, the latest official figures show.
The private rented sector in England saw rents rise by 1% while in Wales they increased by 1.2% and in Scotland by 0.6% but they fell by 0.2% in London, the first decline in the capital since September 2010.
A breakdown of the figures from the Office for National Statistics (ONS) shows that the largest annual rental price increase was in the East Midlands with a rise of 2.9%, followed by the South West up 2% and the East of England also up 2%.
The lowest annual rental price increase was in London with a fall of 0.2% which followed a month when there was no change, followed by the North East where rents were down by 0.1%, unchanged from April.
The index report also shows that growth in private rental prices paid by tenants in Britain has slowed since the end of 2015 and this has been driven mainly by a slowdown in London over the same period.
Between January 2011 and May 2018 rents have increased by 15.8% but when London is excluded from these figures, they increased by 12.4% over the same period.
The private rental sector continues to face uncertainty as the impact of the Government’s interventions in the treatment of buy to let funding continue to work through, according to Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA).
‘For many landlords, the full economic impact will not be felt for some months yet and will affect individual landlords differently, according to the structure of their property portfolios,’ she said.
‘So it’s not surprising that this situation is having an effect on rents, with some stagnating and others rising as landlords continue to analyse and weigh up their options. While in London in particular, rents slightly decreased for the first time since September 2010,’ she pointed out.
She explained that the loss of tax relief in particular has, inevitably, put pressure on landlord finances, prompting many to reconsider their investments. ‘We are hearing claims that large numbers of landlords may decide to exit the market. It remains to be seen whether this materialises but, given the fall in new purchases by landlords, a significant reduction in properties available for private rent would clearly make life more difficult for tenants, with higher rents likely being charged on a diminishing supply of suitable properties,’ said Davies.
‘The Government’s interventions were designed to re-calibrate the balance between private landlords and home owners. That balance has evidently changed, as illustrated by the cooling in the buy to let market, but care must be taken to avoid a more dramatic shift, which could distort an essential element of the housing market,’ she added.