Asking rent prices have dropped across the UK in the third quarter (Q3) of the year, driven by declines in the south, according to the latest report from Rightmove.
Historically, asking rents for new properties coming onto the market rise in Q3, as it is typically one of the busiest times for the lettings market. However, the latest Rental Trends Tracker from the property portal shows that rents are down, as supply starts to exceed demand.
The average asking rent was down by 0.2% in Q3, driven by a 2.3% decline in the South East, where rents were down for the first time in six years. Outside of London, the average asking rent is now £789, down from £790.
The Head of Lettings at Rightmove, Sam Mitchell, says: “Since last April’s second home Stamp Duty changes came in, the supply of new rental properties in the South East has been steadily increasing, up 5.5% on this time last year.
“Agents are reporting that some investors looking for better yields are shifting their focus from London to instead buy in the surrounding counties of Surrey, Berkshire and Buckinghamshire.
“The increase in stock in the South East has led to softening in rents in some areas where there is less competition among tenants, but they are holding up in key commuter areas where tenant demand is strong.”
In London, asking rent prices are at their lowest for this time of year since 2013, at an average of £1,920 per month, from £1,934 – down by 0.7%.
While the decline seen in the South East is due to increasing supply, the picture is different in the capital, where new listings were down by 3.7% on Q3 2016.
Mitchell adds: “Last year, the supply of rental properties in London increased as much as 26% when investors rushed to buy ahead of the Stamp Duty changes, leading to cooling rents over the last 12 months in the capital.
“Now, it appears that rental investors are starting to move their money away from London, with a number of agents across London saying that investors are being replaced by first time buyers. This is likely to constrict rental supply in the capital and lead to rents increasing again, so now would be a good time for prospective tenants to act, before this happens.”
In every region but the South East, London, and Yorkshire and the Humber (where rent prices dropped by a slight 0.2%), asking rents rose by up to 2.6%.