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Rents continue to rise across the UK

Rents on new tenancies rose across most parts of the UK over the three months to June, albeit at a slower pace, new figures show. 

The latest data from the HomeLet Rental Index reveals that the cost of a new tenancy in the private rentals market in the UK, excluding Greater London, rose by 3.5% to an average of £773 per month in the three months to June 2016 compared with the corresponding period 12 months earlier. But the figures represent a fall from the 4.4% annual rise witnessed over the three months to May.

According to the Index, rental prices rose in almost every area of the country, with 10 out of the 12 regions surveyed seeing an increase over the three months to the end of June.

Rental price growth in the UK was led by East Anglia and the East Midlands, where rents rose by 8.2% year-on-year, followed by gains of 7.4% in Scotland.

London’s rental market, where the average rent on a new tenancy is now £1,575, up 3.9% year-on-year, also saw rental price growth slow – down from 6.2% the previous month.

The North East and North West of England were the only regions to see annual rents fall, down 3.6% and 0.2%, respectively. 

The June data from the HomeLet Rental Index will provide some encouragement for both landlords and tenants, in light of the increase of rental stock following the rush to acquire buy-to-let properties before higher rates of stamp duty came into force at the start of April. 

Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company, commented: “The June HomeLet Rental Index shows that the rental market remains resilient in the face of the various economic and political headwinds the sector has faced recently. Landlords are continuing to secure rental growth whilst there are some early signs of affordability criteria beginning to bear on the rates of rental price growth.

“The impact of the EU referendum vote will now play out over the months ahead: if, as expected, the result acts as a restraint on the supply of new housing, the gap between demand and supply in the private rental sector will remain marked; all the more so if more people decide to rent while waiting to see what happens to house prices.

“Landlords will be considering their position carefully, particularly in the light of further taxation changes to come next year, which could reduce net yields; with long-term drivers such as net population growth still in place, it is likely that rents will continue to rise, though affordability will continue to be crucial. The recent slowdown in rental growth rates may suggest an affordability ceiling is being approached.”

Rental figures from the June 2016 HomeLet Rental Index

 

Region

Average rent 3 months to June 2016

Average rent 3 months to May 2016

Monthly

Variation

Average rent 3 months to June 2015

Annual variation

South East

£978

£969

0.9%

£958

2.0%

East Midlands

£651

£648

0.4%

£602

8.2%

Greater London

£1,575

£1,563

0.7%

£1,515

3.9%

South West

£888

£896

-0.9%

£886

0.3%

East Anglia

£865

£830

4.2%

£799

8.2%

Northern Ireland

£612

£629

-2.6%

£587

4.3%

Yorks & Humber

£642

£634

1.2%

£611

5.0%

West Midlands

£675

£671

0.7%

£647

4.4%

Wales

£615

£609

0.9%

£595

3.4%

North East

£540

£542

-0.4%

£560

-3.6%

Scotland

£702

£721

-2.7%

£654

7.4%

North West

£656

£653

0.4%

£658

-0.2%

UK ex Greater London

£773

£771

0.3%

£747

3.5%

Notes:

source HomeLet

Based on new tenancies in April, May & June 2016

Based on new tenancies in March, April & May 2016

Comparison of average rent in 3 months to end June 2016 & 3 months to end May 2016

Based on new tenancies in April, May & June 2015

Comparison of average rent in 3 months to end June 2016 & 3 months to end June 2015

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