Rents in UK experience 1.2% year on year increase
The average monthly rent in the UK has risen by 1.2% in February, compared to the corresponding period a year earlier, according to the latest HomeLet Rental Index. Rents for new tenancies now average £906 per calendar month (pcm). In London, the rents increased by 1.1% in February 2018, causing the average rent in the capital to now stand at £1537 a month. Excluding London, the average UK rental value is £758pcm, which is up 2.3% on last year.
Rents experienced an upsurge across all regions in the UK, with Scotland in the lead, with rents up 5.5% year-on-year. Other regions to have experienced a positive growth in rental prices include Northern Ireland, where rents have risen 4.3%, followed by the East Midlands and West Midlands at 3.9% and 2.5 % respectively.
Other regions to also display rental price gains as a result of the positive trend comprise the South West (1.9%), East of England (1.2%), North West (1.2%), Greater London (1.1%), Yorkshire & Humberside (0.6%), North East (0.4%) and South East (0.3%). Interestingly, Wales was the only region to see rents drop on an annual basis – down 1.5% year-on-year.
In recent years, the UK’s housing crisis has impacted home ownership and the accessibility to social housing negatively. Private renting has managed to assuage the demand to some extent. Therefore, it is reasonable to assume that the rent hike news will bring little cheer to Britain’s swelling pool of renters. Especially in light of forecasts that expect rental values to continue their upward climb across the UK. This upward pressure on rents can be attributed to the increased cost of mortgages, tough measures introduced by the government, including new taxes, tougher lending criteria, and a potential rise in interest rates in May 2018. All of which have contributed towards the narrowing of healthy buy-to-let annual profits.
All things considered, something must give. In the short term, the rents have risen, and will perhaps continue to rise. In the long term, raised entry barriers will dissuade aspiring buy-to-let landlords from entering the market, in addition to buy-to-let investors gradually quitting the market. The wheels seem to be already in motion. Property Reporter recently reported that nearly two thirds of landlords surveyed are considering selling at least one property, with 1 in 9 considering selling all their properties. This will further result in the shrinkage of available buy-to-let places and encourage unsustainable rises in rental prices due to demand far outstripping the supply.