Rents in the UK, excluding London, increased by 1.18% in the 12 months to July 2018, the slowest annual rental increase in five years, according to the latest index to be published.
The data from the Landbay rental index also shows that when London is included in the calculation, the overall growth in rents is just 0.18% and rental growth is at its lowest point since the index began.
Despite this, strong growth can still be found in many areas in the UK. Monmouthshire in Wales tops the growth, followed by Nottingham and Conwy. In contrast, the fall in oil prices since 2014 has meant Aberdeen City and Aberdeenshire are the top two worst performing areas.
The index report points out that in the last two months rents in London have returned to positive territory and the city has recorded its first annual rental increase in 18 months in June.
Overall rents increased by 0.84% year on year in the UK and by 0.08% month on month to an average of £1,206. Excluding London they increased by 1.18% annually and 0.11% month on month to £765.
In England rents increased by 0.81% year on year and by 0.09% month on month to £1,237 but excluding London the rise was 1.18% and 0.12% respectively to £771 while in London rents increased by 0.2% year on year and 0.03% month on month to £1,887.
In Wales rents increased by 1.6% year on year and 0.1% month on month to an average of £651, while in Scotland they increased by 0.98% year on year and 0.01% month on month to £734 and in Northern Ireland by 1.45% year on year but fell by 0.21% month on month to £573.
While rental growth in Scotland hit a record low at 0.98% year on year and there is a similar picture in Wales where rental growth reached its lowest level since June 2015, rental growth at 1.6% remains higher than the Welsh average growth rate of 1.49%. Also, cities in Wales and Scotland led the annual growth.
A breakdown of the figures shows that in face of the slowdown, there remains hot spots throughout the UK for rental growth. Monmouthshire in Wales leads the growth with rents up 3.22% year on year, followed by Nottingham up 2.87%, Conwy up 2.71%, Stirling in Scotland up 2.68%, Blaenau Gwent up 2.61%, Carmarthenshire up 2.6%, Inverclyde up 2.59% and Edinburgh up 2.58%.
Even although Aberdeen city and Aberdeenshire lead the annual fall, with decreases of 4.44% and 4.3%, the next biggest rental falls are in England with Windsor and Maidenhead down by 1.19%, Luton down 1.07%, Halton down 1.06%, Kensington and Chelsea in London down by 0.93% and Hartlepool down by 0.85%.
‘Rental growth across the UK is stuttering. However, there are signs of a recovering market in London and stronger demand for rental properties,’ said John Goodall, chief executive officer of Landbay.
‘On the face of it, landlords have had a tough time in the past two years from increased regulatory pressure to a significant increase in stamp duty costs, yet they have managed to shoulder many of these costs without passing them onto tenants,’ he explained, adding that the just announced interest rate rise could have an impact if landlords raise rents as a result.
‘Tenants could be hit by rent rises in the near future as landlords look to recover some of the cost. Brokers can help their clients navigate the impact of an interest rate rise and make sure they have the best deal for their circumstances,’ he added.
