Rental growth in London rises for first time in 8 months

The most recent data released from Countrywide has revealed that the run of eight straight months of falling rents came to a halt in July.

Rents in the capital ended the month up by 2.1% on the same period last year, with the number of properties available to rent in the capital falling sharply. Across Britain, the rate of rental growth rose from 1.1% in June to 2.2% in July.

Rental Rises

Rental growth across the South of the country is beginning to rise, with three of the four English regions boasting the quickest rental growth located here, namely the South West, South East and Greater London.

Across Britain, the number of homes to rent rose by 4% year-on-year. However, the rate of growth slowed in each of the last 10 months. London (-18%), the East of England (-6%) and the South East (-5%) all saw fewer homes on the market than at the same period last year.

In April 2016, when Stamp Duty surcharges of 3% were added on buy-to-let and second homes, the number of homes on the market in Britain was 14% greater than in the previous 12 months.

Capital Pains

A steady fall in the number of properties available to rent in London has been driven by a drop in the number of landlords purchasing since the Stamp Duty changes came into force.

July saw the proportion of London homes purchased by landlords fall to their slowest rates for seven years. Only 10.5% of the homes sold in the capital last month were bought by a landlord – the lowest figure since August 2010.

The drop in the number of homes to rent in London has not been matched by a decline in tenant numbers. The number of would-be renters in the capital was unchanged from last year, meaning that a similar proportion of renters were in fact chasing less homes.

Falling

Johnny Morris, Research Director at Countrywide, observed: ‘The rush to beat higher stamp duty rates in April 2016 caused a spike in the number of homes to rent, but that has now worked its way through the market. The stock of homes to rent is now falling in the more expensive parts of the country because higher tax rates have dissuaded large numbers of landlords from buying.  Ultimately this means fewer homes on the market and higher rents.’

‘Across the Midlands and the North, higher rates of stamp duty are much less of a disincentive to investors.  Here the number of homes on the market remains up on last year, buoyed by investors living in London and the South East choosing to buy in the Midlands and the North.’[1]

[1] http://www.propertyreporter.co.uk/landlords/rental-growth-up-in-the-capital-for-first-time-in-eight-months.html