The average cost of renting a property in the UK rose by 1.5% in the 12 months to December 2018, the latest figures from HomeLet show, but this remains below UK inflation rates, last reported by the Office for National Statistics (ONS) at 2.3%.
HomeLet’s index, which is based on new lets agreed by landlords and agents using its referencing service, reveals that the average rent in the UK is now £921 per calendar month (pcm).
When London is excluded, growth, in percentage terms, dropped to just 0.7% last year with the average rent in the UK - without the capital - now stood at £763pcm.
Average rents in London are now £1,596pcm, up 4.7% on last year – the third consecutive month where the rate of annual growth has been above 4%
Greater London is the region with the largest year-on-year increase in rents since December 2017, while the greatest year-on-year decrease was recorded in the North East, where rents have dropped 4.6% since December 2017.
Martin Totty, chief executive at HomeLet, 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.”
The December Nationwide House Price Index reports that house price growth slowed to 0.5% in 2018, down from 2.6% in 2017, and this i having an impact on the PRS.
Totty 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% during the last four months of 2018.
“In contrast, we have seen average rental values in the capital rise by over 4% in the latter stages of the year. Ultimately, we would expect this theme to continue in London, if the demand for property outweighs supply.”
Commenting on the outlook for 2019, he further stated: “Private residential landlords will continue to play a key role in the wider UK housing market. 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. Unlike the trends we saw in 2018, any reduction in supply could lead to rental increases that are above the rate of consumer inflation.
“The data used in the HomeLet Rental Index provides us with a forward-looking view of the rental market, so it will be interesting to see how this theme develops in early 2019.”