Rental Index Shows Rents from Property Investments Growing

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The latest Homelet Rental Index covering December has shown a continuation of the steady rise in rents seen throughout the year.

The rental index confirmed that the average rent in the UK is now £921, up by 1.5 per cent when compared to December 2017.

Though rents in London have been falling slightly in recent months according to the rental index, the capital was still the top performer helping to boost the rest of the country.

When London is excluded, the average rent in the UK is now £763, up 0.7 per cent on last year.

Average rents in Greater London are now £1,596, up 4.7 per cent on last year, the largest year-on-year increase of any area. Whilst this is the third consecutive month where the average rental price has decreased, it is the third consecutive month where the rate of annual growth has been above 4 per cent.

The worst performing region with the largest year-on-year decrease in the rental index is the North East, showing a 4.6 per cent decrease since December 2017.

Commenting on the rental index data, chief executive of HomeLet, Martin Totty, said: ‘Positively for both tenants and landlords, this year we’ve seen stability in UK rental price growth, with increases remaining broadly in line with the rate of consumer inflation. For landlords there remains a sustained demand for property, with the private rental sector continuing to provide the market with both flexible and long-term housing options.’

He continued: ‘The slowdown in the rate of house price growth, as reported by the Nationwide House Price Index is being driven by the depressed London market, which saw house prices decline by 0.8 per cent during the last four months of 2018. In contrast, we have seen average rental values in the capital rise by over 4 per cent in the latter stages of the year. Ultimately, we would expect this theme to continue in London, if the demand for property outweighs supply.

With regards to 2019 prospects for the sector, he said: ‘Whilst the outlook for property investors remains positive, one of the key concerns for the market in 2019 would be a potential lack of supply in certain regions. The government’s squeeze on private landlords via taxation changes and more regulation could discourage their continued participation in this important sector.’

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