Rents in the North of England rose faster than those in the South, and London moved from having the second fastest rental growth to the third slowest of the 11 regions in Great Britain. The average cost of renting a home in the capital fell 2.9% on last year, the largest fall since March 2009.
The slowdown in rental growth has been driven by an increase in the number of new homes available to rent. Over the year the average number of available rental properties increased by 12% across the country compared to the previous 12 months. While every region saw an increase in available rental stock, London saw the greatest growth, with 22% more homes to rent compared to 2015. Faced with greater choice, tenants have been able to negotiate on price.
Slowing rental growth has also led to a fall in the number of tenants agreeing an increase in rent when renewing contracts. In 2016 a third (33%) of tenants who renewed their contract saw their rent go up, down from 37% in 2015. The average size of the rental increase remained unchanged at 2.1% over the course of the year. Only renewing tenants in Central London and Scotland saw their average rent drop, by 2.8% and 0.2% respectively.
Johnny Morris, Research Director at Countrywide, said: “As the number of homes available to rent has grown landlords have had to work harder to attract tenants. The average time to let spiked in April and has remained resolutely high ever since. Landlords are increasingly tempting sitting tenants to renew contracts with the promise of unchanged or even lower rents.
“Rental growth will likely increase in 2017. Squeezed yields, fewer tax breaks and higher stamp duty rates are likely to deter landlords from expanding their portfolios. Fewer homes on the market will leave tenants with less choice and negotiating power.”
