Rental price inflation dropped for the first time in almost eight years in May, according to new data from HomeLet.
The average rent on a new tenancy beginning in May was £901, marking a 0.3 per cent decline from the same period the previous year. New tenancies on London rental properties saw a 3 per cent annual drop.
The decrease in average rental values in May marks a significant point for the buy to let sector, in that it is the first time since December 2009 that the HomeLet Rental Index has reported an annual fall in rents. Following a peak of 4.7 per cent last summer, the pace of rental price inflation in the UK has been steadily declining in recent months.
The slowdown in the rental sector mirrors that of the housing market, with Nationwide Building Society revealing in June that house prices had fallen in each of the past three months.
The London market was hit especially hard, seeing average rents fall from £1,572 a month last July to £1,502 in May. The 3.0 per cent annual fall last month was the steepest decline seen in the capital since 2009.
Commenting on the research, HomeLet’s Chief Executive Officer, Martin Totty said: ‘May 2017 saw average rents nationally fall for the first time in eight years when the economy had suffered the shock of the financial crisis. HomeLet rental data suggests landlords are now facing a difficult balancing act between ensuring rents are affordable for tenants in a low real wage growth environment whilst covering their own rising costs.
‘Tenants will still need a vibrant and growing rented sector to provide them with property options at the time of their choosing. Any constraint to the supply of rental properties, because landlords are unable to achieve the reasonable returns they require, cannot be in the long term best interests of tenants, especially if, as we’ve now heard from all the main political parties, the UK’s population continues to grow.’