The cost of renting a home in England is growing at its slowest pace for five years, up just 1.18% in the 12 months to May 2018 to £769, the latest rental index shows.
Meanwhile, annual rental growth in London was negative for the 17th month in a row, according to the data from the Landbay rental index, but this has been trending back towards zero since July 2017, down just 0.08% in the year to May.
The last time annual rental growth in England was at this level was in April 2013, when rents increased by 1.16%. Annual rental growth peaked in November 2015 when it was at 2.63%, though this has gradually slowed each month since to return to 1.18%.
Rental growth outside of London remains positive and, despite the pace slowing, rents have increased by a cumulative total of 10.32% over the past five years. Rents in the East England have seen the most considerable growth during this time, growing by 14.67%, closely followed by the East Midlands where rents have increased by 12.83%.
The index data also shows that the North East of England has seen the smallest amount of growth, with rents rising by just 1.90% over the same period.
London rents have still risen by 6.88% over the past five years and, with 17 out of the 33 London boroughs now in positive territory and the index report suggests that the London lettings market looks set to make a recovery to positive growth in the coming months.
‘Landlords have been faced with a number of challenges over the past two years, from stricter regulation, reductions to tax relief, and a significant stamp duty tax hike when buying a buy to let property,’ said John Goodall, chief executive officer of Landbay.
‘Some might have expected this pressure to push up rents, though low interest rates and the Bank of England’s Term Funding Scheme (TFS) have kept the cost of borrowing down and allowed landlords to shoulder some of the costs,’ he explained.
‘With a rate rise being just around the corner, and the TFS now having ended, things could be about to change. While we are unlikely to see an immediate impact, the pace of rental growth may well speed up in the latter half of this year as landlords look to price in the changes that have been building up for some time,’ he added.
