Tenants across the UK face higher costs over the next year as rents continue to rise year on year, with the Royal Institute of Chartered Surveyors (RICS) predicting that rents will grow at a faster pace than house prices over the next five years.
Key stats at a glance:
ARLA (Association of Residential Letting Agents) Propertymark’s July Private Rented Sector Report – 35% of landlords saw rent increases, while 2% say tenants negotiated a rent reduction.
HomeLet Rental Index – UK rents up by 2.4% over the year to August 2017.
ONS Index of Private Housing Rental Prices – UK rents up by 1.6% to August 2017.
Royal Institute of Chartered Surveyors (RICS) August 2017 Residential Market Survey – predicts that rental growth will outpace house price growth over the next five years.
Your Move Buy to Let Index – rents up in England and Wales by 4.4% and in Scotland by 4.9%.
Rents continue to rise
HomeLet’s August Rental Index reveals that rents in the UK went up by just 2.4% in August compared to a year ago, with the average monthly rent at £939 – this is the highest annual growth since November 2016.
In London, rents went up by 2.5% over the same period with the average rent now £1,609.The average rent in the UK is £776 if London is excluded from the data.
HomeLet reports that rents went up most quickly in the South West of England (+3.9%) and in Northern Ireland (+3.7%), with only the South East reporting rents falling (-0.2%).
Commenting on the research, Martin Totty, HomeLet’s chief executive, says: “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.”
“Bleak picture for tenants”
ARLA Propertymark (Association of Residential Letting Agents) reveals in its August Private Rented Sector report that the number of letting agents who reported that landlords had put up the rent was 35% – the highest increase since July 2015. Only 2% of tenants successfully negotiated a rent reduction – down from 2.5% in July.
The number of properties managed per member branch was 189 in August – down from 192 in July, but up from 190 last August. It reports that the number of rental properties coming on to the market continued to increase slowly, together with growing demand.
David Cox, chief executive of ARLA Propertymark, says: “This month’s findings paint another bleak picture for tenants. In November last year, only 16% of agents saw landlords increasing rent costs, but that figure now stands at 35% – which is likely to continue rising. Landlords have had a rough ride at the hands of policy changes at government level, and it’s becoming clear that these additional costs are now being passed on to tenants.”
Your Move’s indices report that rents are growing across England & Wales, and Scotland, with the average rent in England & Wales now £904 and in Scotland, £579. Overall, rents are rising faster in Scotland at 4.9% on average, compared with 4.4% in England & Wales.
Richard Waind, director, Your Move, says that after a drop-off following the Brexit vote, the number of tenants looking for properties has started to recover.
He says: “We have started to see a resurgence in tenants coming to the market in recent months, particularly in London. Figures are returning to the levels that we would expect around this time of year, with August and September being the busiest months for lettings as students, graduates and families working in the education sector look for new properties.
“This recovery in tenant enquiries, combined with continued subdued supply of new listings in the wake of recent tax changes affecting landlords, has been a key reason for price increases in the last year and could push rents up further in the coming months.”
ONS reports slower rent rises
In contrast, the Office for National Statistics (ONS) Index of private housing rental prices in Great Britain for August 2017 reports that rents went up annually by 1.6% over the year to August – which is down from a 1.8% annual rise in July. This means that a property that was rented for £500 a month in August 2016, would, on average, be rented for £508 in August 2017.
In England, private rental prices grew by 1.7% compared with 1.3% in Wales and 0.3% in Scotland. Meanwhile, in London private rents went up by 1.2% in the year to August 2017.
The Royal Institute of Chartered Surveyors (RICS) August 2017 Residential Market Survey reports that instructions from landlords are more or less flat, with 61% of surveyors and property professionals it polled anticipating more landlords to exit the market in the next 12 months, while only 12% expect that new landlords to enter the market.
RICS says that those polled expect further rental growth over the next 12 months and that over the next five years, they expect rental growth to outpace house prices, averaging 3% a year compared with 2% for house price growth.
ARLA Propertymark’s Private Rented Sector Report – online survey of 216 ARLA member estate agents between 30 August and 11 September 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.
RICS Residential Market Survey - A monthly sentiment survey of chartered surveyors who operate in the residential sales and lettings markets. This survey sample covers 340 responses coming from 640 branches.
Your Move Buy to Let Index - Based on analysis of approximately 20,000 Your Move properties across England and Wales.