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Rents in the UK rose by an average of 2.4 per cent during August, new data from HomeLet reveals, the highest rate of annual growth seen in the Private Rented Sector this year. The average rent agreed on a new tenancy signed last month was £939 according to the August HomeLet Rental Index, compared to £916 in the same month of 2016.
August’s increase in average rents was partly driven by a return to inflation in the London market, where rents agreed on new tenancies last month were 2.4 per cent higher than in August 2016. Last month’s increase took the average rent in the capital to £1,609 – the first-time rents in London have been above £1,600.
Excluding London, rental price inflation has also picked up, with 10 out of the 11 remaining regions beyond the capital seeing rents increasing last month. The average rent on a new tenancy outside London was £776, up 2.3 per cent compared to the same period in 2016.
Rents rose fastest in the South West of England (up 3.9 per cent compared to August 2016) and Northern Ireland (3.7 per cent), with only the South East (-0.2 per cent) recording a decline. HomeLet’s regional data is available in more detail via an online interactive infographic.
Commenting on the research, HomeLet’s Chief Executive Officer, Martin Totty said: “Whilst we’ve often observed a seasonal uplift in average rents at this time of year, there’s evidence of a trend now emerging which points to a reversal of the declines seen over the early part of this year.
This will be welcome relief to Landlords who have been battered by the perfect storm of tax changes and post-Brexit uncertainties. Whether the trend continues or represents only temporary relief from the headwinds faced by property owners, the remaining months of 2017 should provide the answer.”
Martin Totty added: “Whether the recent strengthening in rents achieved, seen generally across all regions of the country, is driven by more robust demand or by some restriction of supply is hard to judge.
Either way, landlords will only be encouraged to invest in property over other assets if they’re convinced they can achieve reasonable returns. If not, then the supply of rental properties could become constrained.
Many landlords still face further increases in their costs and so will need to find a new equilibrium between their legitimate required returns and affordability for tenants. It seems the elements in solving that particular equation become ever more complex.”