The annual rate of rental price growth in London fell for the first time in six years in July as rents dropped across the UK, according to Countrywide. 

Average rents in the capital have depreciated by 0.5% over the last 12 months making the average rent £7 per month cheaper than it was in 2015.

The last time rents in London recorded a year-on-year decline was in November 2010, when the average monthly rent in London was £923, 39% less than today.

Across the UK, rents increased by 1.5% year-on-year, the slowest rate of growth since 2012, reflecting a sharp rise the number of homes to let.

In July, there were 23% more homes available to rent in the UK compared with the corresponding period last year, while the capital saw supply in the private rented sector increase by a third, driven largely by the fact that purchases rushed through deals in the first quarter of the year to beat the stamp duty deadline at the start of April.

A sharp rise in the volume of homes on the market has meant significantly fewer deals are agreed above asking rents.

In July 2015, 16% of tenants paid over the asking rent to secure a home compared to 7% in July 2016. In London, the fall was larger, with 11% of homes let for more than the asking price last month, down from 32% in July 2015.

In July, the average rent in the UK was £951 a month, up 1.5% year-on-year, but increasing half as fast as in July 2015.

Rents in London (-0.5%), South East (-1.1%), Wales (-2.0%) and Scotland (-1.0%) are now lower than they were in July 2015.

Across the North and Midlands, the rate of rental growth hit the highest level for two years.

Rental prices for new lets

Source: Countrywide

Rental prices for renewed contracts

Source: Countrywide      

Johnny Morris, director of research at Countrywide, said: “The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing.  Stock levels were already running higher than usual due to investors bringing forward purchases in the rush to beat the stamp duty deadline in April.  Added to that, uncertainty in the sales market in the run up to, and after the EU Referendum has caused more discretionary sellers to turn to the rental market.

“While rental price growth has slowed, current market dynamics are likely to accelerate the growth of renting.  It seems that with more stock and demand from tenants we will see the number of households renting increase in 2016.”

Rental prices for all occupied units

Source: Countrywide