The average asking rent across the UK, excluding London, increased by 0.7% in 2017, which is the lowest rate of growth since 2014, new data from Rightmove shows.
According to the property website, growth last year was significantly lower than 2015 and 2016, which saw increases of 3.7% and 3.5% respectively.
Over the last three years tenants have therefore seen landlords increase asking rents by 7.6%, which equates to an average hike of just over £50 per calendar month.
Following a few years of the market readjusting downwards from the heady annual rise of 8% recorded in 2014, according to Rightmove, the asking rents of new rental properties coming on to the market in London are rising again, leading to the first increase in the annual rate of growth since the start of 2016.
The drop in rents was also aided by a sharp increase in rental supply in 2016 from landlords who had rushed to buy up properties to rent out before the additional stamp duty on second homes came in. As supply has tightened prices have started to increase again.
The South East also saw rents fall, with the region ending the year down 0.7% on 2016. The overall regional trend masks some of the key commuter areas that continue to perform strongly, with Farnham in Surrey coming top for rental price growth in 2017, up 9% on 2016.
Rightmove Director Miles Shipside said: “Nationally rents have been holding pretty steady over 2017, retaining the 3% plus rises seen in both 2015 and 2016, and adding a more modest 0.7% in the last 12 months.
“Increasingly stretched tenant affordability and the surge of buy-to-let property supply beating the stamp duty tax hike deadline have acted together to mute landlord pricing power. In contrast, after a few years of falling rents in London they’re back on the up again, due to a combination of tightening stock available to rent and strong demand.
“While the 2017/2018 tax year will see the start of the government’s changes to tax relief on buy-to-let mortgages, we don’t think this first phase will have that much of an effect on many landlords’ portfolio decisions until another year down the line.
“From speaking to some landlords they’re unlikely to make any decisions to sell up until they see in real-time how much of an impact it has on their finances, with many choosing to take a wait and see view rather than looking at short-term gains or losses. However, agents report that there are some highly-geared landlords with large loans looking to reduce their exposure to loss of tax relief by cashing in and selling some properties.”