Rents in the UK continue to trend upwards, latest rental index shows
|THURSDAY, 05 MAY 2016|
|Residential rents increased in all but one region of the UK over three months to April taking the average rent, excluding Greater London, to £764 per month, the latest index data shows.It means that the average rent in the UK outside of Greater London us now 5.1% higher than a year ago while the average rent in London is now £1,543, up 7.7%
Scotland and the East Midlands lead the way with fastest rising rents while the North West is the only region to register declines in rent, according to the HomeLet rental index for April.
The index report says that fears that higher stamp duty charges on buy to let rental property purchases might destabilise the market have so far proved unfounded. Indeed, HomeLet’s figures show that rents agreed on new tenancies across the UK over the three months to the end of April have continued to grow at remarkably consistent rate.
The index also shows that rents on new tenancies signed over the three months to April 2016 were, on average, 5.1% higher than in the same period of last year. That was barely changed from March’s figure of 4.9%, with rent rises having remained in a very narrow band since the beginning of the year.
However, in London rents on new tenancies signed over the three months to the end of April were 7.7% higher than a year ago, the third successive month that London has registered this rate of increase.
The latest figures show that rents in Scotland are currently rising faster than anywhere else in the UK, with new tenancies costing 11.4% more than in the same period a year ago while the East Midlands saw a rise of 7.9% in rents compared to last year.
London’s rental market, where the average rent on a new tenancy is now £1,543, also continues to see rents rise more quickly than in most other areas of the country. The 2.6% gap between rent rises on new tenancies in London and the rest of the UK, where rents average £764, is barely changed on the previous.
Just one area of the country, the North West of England, saw lower rents on new tenancies over the three months to March, as was the case in the previous month’s index. However, the speed at which rents are falling in the region continues to slow, to an annual rate of just 1% over the three months to April, compared to 3.5% over the three months to March. Rents agreed on new tenancies in April alone were 1.7% higher than in March.
‘It may be that over the next several months, the trends observed in the rental market begin to reflect the signs of some slowdown in the rate of house price growth that we are now beginning to see and that will be something to watch closely,’ said Martin Totty, chief executive officer of HomeLet parent company Barbon Insurance Group.
‘But more broadly, there has been very little to alter the fundamental relationship between demand and supply, especially in those parts of the country where demand-side pressure is greatest,’ he pointed out.
‘For now it’s business as usual, which may be better news for landlords than for tenants, though landlords will no doubt be feeling the squeeze too given the various taxation changes they now need to budget for. We will have to see whether landlords try to pass their higher costs on, whether buy to let property investment diminishes in popularity and whether tenants are able to afford further increases in rents,’ he added.