Tenants may have a greater choice of rental properties to move to, but – with the exception of HomeLet, which reports rents falling by 0.3% – other leading rental indices have seen rents rise – albeit at a fairly slow pace.
Key stats at a glance:
- ARLA (Association of Residential Letting Agents) Propertymark’s May Private Rented Sector Report – UK rents up by 1.8% to May 2017.
- Office for National Statistics (ONS) Index of Private Housing Rental Prices – UK rents up by 1.8% over the year to June 2017.
- HomeLet Rental Index – UK rents down by 0.3% over the year to June 2017.
- Rightmove Rental Trends Tracker – rents up by 1.9% annually and 2.8% quarterly to June 2017.
HomeLet’s June Rental Index reports that rents in the UK fell by 0.3% in June compared to a year ago, with the average monthly rent now £908 – for the second month in a row.
Rents on new tenancies in London fell by 2.6% in June this year compared to June 2016. The average monthly rent in the capital now stands at £1,524.
HomeLet’s chief executive Martin Totty says: “It is now a full year since rental price inflation in the UK peaked at 4.7%, since then we’ve seen progressively more modest rent increases and, over the past two months, falls in some areas of the country; June’s figures are the first indication that this trend may now be beginning to flatten out, but it’s too early to say this with any certainty.”
Rents driven by London slowdown
The Office for National Statistics’ (ONS) Index of private housing rental prices in Great Britain for June 2017 reported that rents went up by 1.8% over the year, which is unchanged since April. This means that a property rented out in June 2016 for £500 would now cost £509 a month.
The ONS says this slowdown in the growth in private rental prices in Great Britain is mainly driven by a slowdown in London over the same period, with rents up by just 1.3% in the capital in the year to June 2017.
Meanwhile, rents in England were close to the national average at 1.9%, in Wales rents went up by just 1.1% and Scotland saw rents go up by 0.2%, reversing a fall of
-0.1% in May.
More choice for tenants
Rightmove’s quarterly Rental Trends Tracker reports that rents outside London rose 2.8% in the second quarter of 2017, with the average asking rent at £790 per month between April and June 2017.
However, in Greater London rents were down by -3.2% over the year and by -0.2% between April and June, with an average asking rent of £1,934 per month.
The good news for tenants is that the number of properties available to rent outside London is 7% higher than in June 2016, and 8% higher in London.
Rightmove reports that properties are taking 11% longer outside London and 15% longer in London to let out than the same quarter last year.
Sam Mitchell, Rightmove’s head of lettings, says: “Many thought that rental supply would constrict this year, as landlords sold up and looked to invest their money elsewhere, but clearly this isn’t happening yet.
“Perhaps landlords are remortgaging their buy-to-let properties instead, as they still feel it’s a better investment than looking to other industries. It could spell good news for tenants coming to the end of their lease as they might find there is slightly more choice than last year. Anyone hoping for a drop in prices due to the extra choice will be disappointed, though, as rents are following a very similar trend to previous years.”
‘Rents will only become more unaffordable’
ARLA Propertymark’s May Private Rented Sector (PRS) Report reveals that 27% of the 247 estate agents who took part in its survey reported that rents went up for the second month running, with only 2.8% of tenants successfully negotiating a rent reduction.
It reports that over the past 12 months, the supply of rental stock has risen by 11%. In May 2016, letting agents typically managed 171 properties per branch whereas in May this year they managed 189.
David Cox, chief executive of ARLA Propertymark, says: “Private rents rose by 1.8% in the 12 months to May 2017, and the last thing tenants need is for them to get even higher.
“With the new government confirming a Tenants’ Fee Bill [to ban charging tenants lettings fees] in the Queen’s Speech, we can expect rents to rise by up to £103 a year, hitting loyal tenants looking for long-term agreements hardest. This is on top of any natural organic rent growth. The only thing which could offset this would be to significantly increase rental stock, but until this happens and supply and demand meet in the middle, rents will only become more and more unaffordable.”
ARLA Propertymark’s Private Rented Sector Report – online survey of 247 ARLA member estate agents between 1 and 14 June 2017
HomeLet Rental Index - Provides data on new tenancies in the UK. As part of referencing prospective tenants each year, HomeLet processes information including the rental amounts agreed, the number of tenants moving into the property, together with the employment status, income and age of all tenants.
ONS Index of Private Housing Rental Prices - An experimental price index tracking the prices paid for renting property from private landlords in Great Britain.
Rightmove Rental Trends Tracker – compiled from the asking rents of properties coming on to the market on Rightmove.co.uk. It measured 360,757 asking rents for properties advertised on its website by agents in Q2 2017.
For all areas lower than region the asking prices and % growth are for two bed properties.