Rents continue to go up at a steady pace across the UK, with larger increases in the South West and East of England.
Meanwhile, more landlords are reported to be selling up or heading north for better returns.
Key stats at a glance:
- ARLA Propertymark April Private Rented Sector Report – 26% of tenants experienced rent hikes.
- Hamptons International Monthly Lettings Index – rents up 1.9% over the year to April 2018.
- HomeLet Rental Index – UK rents up by 1.5% over the year to April 2018.
- Office for National Statistics (ONS) Index of Private Housing Rental Prices – rents up by 1% over the year to April 2018.
- Your Move England & Wales Rental Tracker April report – average rent in England and Wales up by 3.23%over the past year.
In April, letting agents saw the highest number of landlords selling their buy-to-let properties since records began in 2015. The number of landlords exiting the market rose to five per branch, up from four in March, according to April’s ARLA Propertymark Private Rented Sector report.
Estate agents now each have an average of 72 prospective tenants registered – up from 66 per branch in March.
The number of tenants experiencing rent hikes increased to 26% in April – the highest since September 2017 when 27% of landlords put rents up for tenants. Year on year, this has risen from 24% in April 2017.
David Cox, chief executive, of ARLA Propertymark, says the spike in the number of landlords selling up is a result of legislation over the past few years that has made investing in property less attractive.
He says: “Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred. This, in turn, is hitting renters most, at a time when a huge number of people rely on the rented sector.”
Figures from the Office for National Statistics (ONS) show tenants saw their rents rise by 1% in the 12 months to April 2018.
The ONS Index of Private Housing Rental Prices reveals that growth in rents in Great Britain has slowed, increasing by 1% in the 12 months to April 2018, down from 1.1% in March 2018.
This has mainly been driven by a slowdown in London. While rents for Great Britain excluding London increased by 1.6% in the 12 months to April 2018, rents were static in London, showing no rise at all in the 12 months to April 2018.
Stable market continues
The Homelet Rental Index shows that rents across the UK climbed by 1.5% over the year to April 2018 to an average of £918 per calendar month.
It reveals that rents in London went up by a whopping 4.5% over the past year to an average of £1,588 per calendar month. With London excluded, overall rents across the nation were up 0.9% over the year to an average of £761. Rents in Wales are showing the steepest decline with a year-on-year fall at -2.1%.
Martin Totty, chief executive of HomeLet, says: “Rental price inflation was much more stable over the whole of 2017 compared to 2016, when rents rose at an annual rate of more than 4% in the first half of the year, before dropping back in the second half. So far, we are seeing this more stable market continue to prevail in 2018.”
Landlords head north
The Hamptons International Monthly Lettings Index (formerly the Countrywide Lettings Index) shows that the average cost of a rental property in Great Britain was £953 a calendar month – rising by 1.9% over the year to April.
Meanwhile, the cost of a new let in the North fell for the first time in four years. Rents in the North fell -0.3% in April 2018 compared to a year ago, with the average rent per calendar month now £622.
In contrast, rental growth accelerated in the South to 2.2% in April, with the average cost of a new let in the South now £1,372 a calendar month – 2.2 times more than the average rent in the North.
Since April 2016, when the stamp duty surcharge for second homeowners was introduced, landlords have sold 82,000 more homes than they bought in the South, compared to 24,000 sold in the North. This means that in April 2018 there were 5% fewer homes available to rent across Great Britain than in April 2016.
Hamptons reports that rents went up in all regions, except for Scotland (-5.3%) and the North (-0.3%). The East of England reported the fastest rental growth at 3.6% year on year to April 2018, followed by Wales at 3.4%. In Greater London, average rent was up by 2.2% over the year.
Aneisha Beveridge, research analyst at Hamptons International, says: “Low stock levels in the South continue to drive rental growth as tenants compete for fewer available homes.
“Since April 2016, the month the stamp duty surcharge was introduced for second homeowners, landlords across Great Britain have sold 88,000 more homes than they bought. But landlords are finding new ways to maximise their returns by purchasing properties elsewhere, particularly further North in search of lower stamp duty bills and higher yields.”
South West steams ahead
The Your Move England & Wales rental tracker for April 2018 reports that across all of England and Wales, average rents increased 3.23% to £861 – only £1 more than in March.
The South West was the fastest growing rental market in England and Wales in the year to April 2018. The average rent per calendar month in the region increased by 3% over the year to £679.
Worryingly, Your Move reported an upturn in the proportion of renters in England and Wales with arrears in April. It found that 9.4% of all tenants were behind with their rent payments this month, up from 9.1% in March.
Martyn Alderton, national lettings director at Your Move, comments: “There are two big stories this month. The first is the South West of England, where prices grew by 3% in the last year – faster than anywhere else. The East Midlands was the other, with average rental prices hitting £654 which has resulted in average yields for landlords growing from 4% to 4.3% between March and April.
“This is good news for landlords who have been battling falling returns in recent times, thanks to a combination of slower rent increases and government tax changes.”