Rents in the UK saw a steady rise of 0.7 per cent in January in comparison to the same month the previous year, according to the latest HomeLet Rental Index.
The previous month had seen a slightly higher rate of inflation at 1.7 per cent, meaning that UK rent growth has dropped for seven consecutive months from a peak of 4.7 per cent in June. Across the UK the average rent for a new tenancy beginning in January was £888 per month, up from £882 in January 2016.
Areas which previously boasted the highest rates of inflation have since fallen from grace. In Greater London, annual rent inflation was a mere 0.4 per cent in January, down from a staggering 7.1 per cent in July. This pattern was mirrored in the South East, which saw negative growth in January, with the rental rate on new tenancies down 0.6 per cent year on year. This is all the more surprising considering that as recently as June rents were rising at 4 per cent.
HomeLet’s Chief Executive Officer, Martin Totty, said: ‘Our data has been showing, for some time, that landlords do not feel able to raise rents on new tenancies at anything like the pace seen during 2015 and the first half of 2016. Now it is even possible that rents will begin falling, which would be unprecedented in recent times. Landlords and letting agents have clearly recognised concerns about the affordability of rising rents and are now being cautious about what they expect tenants to pay. However, with many landlords facing increasing costs in the months ahead, as the Government begins to cut back on mortgage interest tax relief, the sector faces a difficult balancing act.’
He expressed uncertainty about the effect of the government’s increased regulation, saying: ‘It remains to be seen if landlords feeling the pressure of tougher tax and regulation will be able to recoup these higher costs, as many in the industry had assumed. We see no sign of landlords panicking, and there is little prospect of an end to the long-term imbalance between supply and demand for residential property; still, with economic uncertainty adding to the unpredictability of the short-term outlook, landlords and tenants alike will be monitoring the marketplace very closely.’