It’s good news for tenants as rents are rising at a slower pace in the UK with a wider choice of properties on offer. Londoners, in particular, have witnessed a slowdown in rental growth.
Key stats at a glance:
- ONS Index of Private Housing Rental Prices – rents up by 2% over the year to March 2017.
- HomeLet Rental Index – rents up by 1.1% over the year to March 2017.
- ARLA Propertymark – number of rental properties on the market up by 8%, and more tenants negotiating rent reductions.
- Rightmove – asking rents up by 1.8% over the year to March 2017 and a 12% rise in properties for rent.
The Office for National Statistics’ (ONS) Index of private housing rental prices in Great Britain for March 2017 revealed that rents went up by 2%. This means that a property that was rented for £500 a month last year would have cost £510 a month in March 2017.
The rate of growth is down by 0.1% from last month and down by 0.2% from January 2017.
While rents have gone up by just over the national average at 2.1% for tenants in England, tenants in Wales are seeing rents remaining fairly static at 0.7%, and tenants in Scotland are seeing rents drop by 0.1%, which is down from a 2.1% high in June 2015.
Londoners are also seeing rents rise at a slower page – at 1.6% in the 12 months to March 2017. And like last month, private rental price growth in the South East (3.4%) and East of England (2.8%) outstripped properties in the North East (0.7%) and North West (1.3%).
Rents in London slow down
The Royal Institute of Chartered Surveyors (RICS) March 2017 Residential Market Survey puts down the rise in rents to an imbalance between supply and demand. It found that rents continued to rise, as 11% more respondents noted an increase (rather than a fall) in rents. However, demand for rental properties is more modest than a year ago.
Surveyors and property professionals who took part in the poll expect rents to continue to grow nationwide over the next 12 months, with the exception of London where rents are expected to decline in the short term at least.
The HomeLet Rental Index for March, which provides data on new tenancies in the UK, has also seen a decline in growth in the capital. Annual rental growth has slowed in Greater London over the year, with a typical rent of £1,546 and annual growth of 1.2%. This compares with 6.8% annual rental growth in March 2016.
It reports that UK rents remain almost unchanged, with the average rent in the UK in March at £904 a month – up by just 1.1% since last year when it was £894. This compares with March 2016 when UK rents went up by 4.7%.
Landlords sell up
Meanwhile, ARLA Propertymark’s March Private Rented Sector Report suggests that more landlords are selling their buy-to-let (BTL) properties, with an average of four selling up per branch, compared to three in February.
It also reports that the number of tenants negotiating rent reductions has gone up over the month – with 2.2% of agents reporting rent reductions in February, compared with 3.6% in March. However, this is dwarfed by the number of agents (25%) reporting landlords increasing rents in March – which has been the same for the past two months. This compares with 32% of agents seeing rent increases in March 2016.
More properties available
The number of properties managed by each ARLA Propertymark branch was 183 in March 2017 – up from 169 last year – which means that rental stock has increased by 8% annually. However, there was also a slight increase in the number of prospective tenants in March at 36 per branch, compared with 34 in February.
David Cox, chief executive of ARLA Propertymark, says: “It’s concerning that, despite supply increasing over last year, stock failed to return to the market after dipping in February. When we also consider that this is coupled with a rise in the number of landlords selling their buy-to-let properties, this is bad news for those searching for a rental property.
“The introduction of mortgage interest relief means the market is becoming less and less attractive to investors and it appears some landlords are, as we predicted, choosing to exit the market rather than pay the higher taxes. What’s more, two thirds of our members are concerned the government will introduce even more landlord taxes in 2017, which will only further dampen supply.
“Following the announcement of the ban on letting agent fees, we expect the situation to only get worse for tenants when inevitably the costs are passed onto tenants through higher rents. However, it’s positive that more tenants are taking action and negotiating rent reductions before the consultation ends and they see their rents increase.”
Rightmove also reports a jump in the number of available rental properties. It says that a knock-on effect of last year’s surge in buy-to-let properties means tenants have more choice and there has been slower annual rent growth.
It reports that the number of available rental properties on the property portal is up by 12% compared to the same period last year and that the annual asking rent growth of 1.8% is the lowest since the fourth quarter of 2014, compared to 3.9% reported in the first quarter of 2016.
The growing supply of property has led to it taking 10% longer for letting agents to find suitable tenants than this time last year, and almost 20% longer in London. In London, asking rents fell by 4.2% over the past year.
Sam Mitchell, Rightmove’s head of lettings, says: “The supply boost following last year’s buy-to-let frenzy in the first few months of the year has continued through to 2017, introducing more competition in the market for letting agents trying to secure suitable tenants for their landlords’ properties.
“This extra choice for tenants in many areas has inevitably led to properties taking longer to let than this time last year. However, agents are still reporting that well-priced properties in popular areas are letting quickly.”