Rental market showing signs of recovery
The cost of renting a room or property remained unchanged in May following nine months of consecutive falls.
The latest UK rental index from findaproperty.com shows that the average monthly rent was £819 during May - unchanged from April, but still 5.5% down from £867 seen in the same month last year.
The website says the rental market may have hit the bottom of the cycle, with rents stabilising and the supply of new property easing somewhat.
The total number of properties available to rent increased by 2.7% between April and May, considerably lower than the 14.5% monthly increase seen in the same period last year. The fall could reflect the slight pick-up in the house purchase market, with potential sellers perhaps more willing to put their homes on the market rather than rent them out.
However, the research shows the rental market has polarised; while the number of new houses to rent fell for the third consecutive month in May, the number of new rental flats on the market increased by 4.9% across the UK.
Andrew Smith, head of research at findaproperty.com, also points out that despite the monthly fall in supply, on an annual basis, the increase in new properties remains high at 118.7%.
This saturation of the rental market is reflected in the length of time properties remain on the market; in May it took on average 65 days to secure tenants for a property, 16 days longer than the same month in 2008.
“A slowing in the increase of supply and signs that asking rents are beginning to stabilise indicate that we may be close to the bottom of the rental market - however, the house and flat markets continue to polarise, with houses starting to show a sustained recovery thanks to falling supply levels and rising prices, while the flat market seems to be lagging behind with increasing supply levels and asking rents that continue to fall,” Smith adds.
The rental markets in London and other regions also tell a different story from the national average, with rents in the capital increasing by 0.4% during May to £1,630 a month. The South East, meanwhile, experienced a 0.7% increase while in Scotland and the West Midlands rents rose by 0.9% and 0.3% respectively.
Smith says: “The London market does seem to be showing signs of recovery with the majority of London boroughs recording growth in asking rents over the past month and the remainder only suffering modest declines in value.
“However, we are still some way from the recovery being in full swing, with the vast majority of areas registering significant falls in rents over the past year.”
He adds that activity in the summer months, traditionally a busy period in the rental market, will be key in establishing whether a sustained recovery is in sight.
Jonathan Moore, UK & Ireland country manager at EasyRoommate.com, is confident that the rental market will benefit from the pick-up in activity in the purchase market.
“The rental market has suffered badly from the influx of accidental landlords pushing down rental values,” he explains. “We would expect average rents to recover in the second half of the year as activity in the residential property market starts to pick up and many homeowners, who were forced to rent their properties, start looking towards selling them on.”