Rental growth at slowest pace in three years

Rental growth at slowest pace in three years

The Countrywide monthly Lettings Index for January has found that compared to the same month last year average rents in the UK rose 1.2% to £906 a month.

While this represents the slowest increase in three years, average rents are 12% above their pre-recession peak, reaching the highest level on record. Unsurprisingly, London has seen the largest growth in rents anywhere in the country since 2007, with rents 34% higher than their pre-recession record. Between 2007 and 2016 the average Londoner has seen their rent rise from £966 to £1,295 a month.

Despite the popular narrative of ever rising rents, over the past nine years the majority of the country has experienced rents growing steadily in line with incomes. Average income has increased by 12%*1 since 2007 according to the ONS compared to a 12% increase in average rents.

However, the rental market adheres to a classic North/South divide. In the North West, North East and Wales the average tenant is still paying less than they were in 2007 by £12 a month. Across the UK as a whole, one in five tenants is still paying less rent than they were in 2007. In London rents have grown well beyond incomes. Incomes have only increased by 10% since 2007 in the Capital whilst rents have grown by 34% fuelled by a lack of supply and high demand. As a result tenants have had to either share, downsize or move further from the centre in order to accommodate this rise.

At current rates of rental growth the three regions where rents remain below their previous peak will see average rents surpass 2007 levels by the middle of 2016. In these regions landlords have increasingly looked to renegotiate with long term tenants, some of whom have enjoyed years without any increase in their rent. This January more landlords were able to increase the rent for tenants who renewed their contract in the North East, North West and Wales than at any time since 2012.

In 2007 the average monthly rent for a home in the UK peaked at £809 before the recession hit. Between the end of 2007 and 2008 the average cost of renting a newly let home fell 11%, equating to a fall in the average monthly rent of £87. This brought the cost of renting the average home down to £720. It wasn’t until the start of 2010 that rents started rising again.

Johnny Morris, Research Director at Countrywide said: “Nationally rents in January rose at the slowest rate since 2012, as some of the upward pressure on prices subsided and affordability limited further rises. Across most of London and the South East the slowdown in rental growth is the first since 2010, where rents have been growing for the past 6 years.

The most sustainable way of creating a more affordable rental market in London and the South is by building more homes of every tenure. Unlike in the US where institutional investors build homes to rent, in the UK the sector is dominated by small landlords meaning the link between new homes getting built and the rental market isn’t nearly as close as it should be.”

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daniel black
daniel black 25 Oct 2016

I've been keeping a close eye on what the effect of Brexit has been on the rental market and it's a very mixed bag. Whilst the majority of the news focuses on London's market. I think this time next year...

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Northerner 20 Oct 2016

Any views from outside the M25? No wonder politicians can't get the housing big picture when everyone seems to think that London is the yard stick, when it absolutely is not.

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Sean Lees
Sean Lees 13 Oct 2016

I think that the pest control really depends on the situation. If the tenant moved in and found an infestation that needs pest treatment service, I think it's more reasonable that the landlord should pay...

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Kevin 13 Oct 2016

Please Sian Berry Dan Wilson Craw LANDLORDS DO NOT WANT TO RAISE RENTS They are being forced to because of Section 24! An unfair, punitive tax hike that will be a disaster Green Party, Generstion...

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Fletcher88 11 Oct 2016

Absolutely agree! Moreover property prices edged up with 0.7% this month as the market recovered from the initial Brexit hit

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Gary Das
Gary Das 06 Oct 2016

A lot of lenders (especially the high-street banks and lenders people approach first) could do more to accommodate for the self-employed. It can really be a struggle, as I found out myself last year when...

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richardrawlings 04 Oct 2016

Not sure I understand this! If Basildon and Hemel rose 68% and 52% respectively, why do they not appear in the top ten list, which appears only to feature those in the minus 20's!! Is it me?

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luxus 27 Sep 2016

It can be stressful. More clarity is needed on the process, from a customer perspective and consideration should be given to using the Scandinavian model where the sales process is much quicker.

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Melissa_Green 26 Sep 2016

Green belts are normally designated around capitals and other major cities and conurbations and their aim is to prevent urban sprawl by keeping land permanently open. The essential characteristics of green...

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Jimmy_McCoy 16 Sep 2016

I think that the main reason to buy garden purchases in last minute is because people always search for the best deal. In summer months there are abundance of seasonal goods and it means more low cost

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Jimmy_McCoy 16 Sep 2016

Buying a home often is more expensive than you expect. There are lots of hidden costs such as: stamp duty, surveys and valuations, mortgages etc. that can add more than 10% to the total bill

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