UK rents have started to increase at a rate not seen in the market for more than two years, fresh figures show.
According to the latest data from HomeLet’s Rental Index, rental values have increased by 3.3% in the last 12 months, which is more than was seen in 2018.
The average rent in the UK now stands at £942 per calendar month (pcm).
The South West has see the largest year-on-year increase in rental values over the past 12 months, increasing by 5.8% between March 2018 and March 2019.
When London, where the average rent now stands at £1,613pcm, is excluded, the average rent in the UK is now £782pcm, up 3% year-on-year.
HomeLet’s chief executive, Martin Totty, said: “With the Tenant Fees Act due to take effect in England from 1 June, the acceleration we’re seeing in agreed rental values will come as no surprise to anyone.
“Whilst the aim of the Tenant Fees Act is to reduce the costs that tenants can face, landlords still need to cover the costs that are incurred when setting up a tenancy. With landlords already feeling the impact of taxation changes, the expectation is that costs will be passed back to tenants through higher rents, particularly for new tenancies.
“Landlords’ ability to increase rents will largely be determined by local market dynamics of supply and demand for property. Regional ‘hotspots’, where rents are increasing faster than the UK average over the first three months of 2019 when compared to last year include Wales, Yorkshire and Humberside, the West Midlands, the North East and West, the South East and West, as well as Greater London.”
Commenting on the outlook for the rest of 2019, Totty added: “Recently released annual results from a number of major quoted property agents point to a resilient private rented sector in contrast to a subdued sales market. With a still unclear outcome of the Brexit political impasse and the increasing prospect of a further extended delay in the UK exiting the European Union, the contrasting fortunes of the two main segments of the housing market seem likely to continue for some time.
“If demand for rental property remains strong, coupled with the lower frictional costs of moving between rental properties for tenants from 1 June, landlords may yet be able to recover the additional cost burden they will face by edging up rents. This will likely require the current high levels of employment and real wage growth being sustained. But, it could be the case both tenants and landlords get what they want – tenants are relieved of the one-time up-front burden of feed at the commencement of a new tenancy and instead landlords meet these costs and recover them over time via gradual increases to monthly rents.”