The most recent report from HomeLet has revealed that rents in London increased by only 1.6% in the year to November. This was more slowly than all other regions of the country.
In fact, rental price inflation in the capital is now barely half the rate seen in the rest of the United Kingdom.
Rent increases
While landlords in the capital are still seeing rental increases in cash terms, they are unable to increase prices as much as in the first half of the year, with inflation at 6%.
November was only the second month in which rental increases in London did not keep up with the rest of the country. In fact, the gap is now more marked than at any time since the HomeLet index started.
During the last month, rents increased by an annual average of 3%-the fifth consecutive month in which inflation has either been flat or has fallen. A typical tenant signing up for a new tenancy during November agreed an average monthly rent of £898, in comparison to the £872 during November 2015.
Martin Totty, HomeLet’s Chief Executive Officer, noted: ‘November’s figures reflect a continuation of trends which the HomeLet Rental Index has been tracking for several months. While landlords have been able to edge rents up, the amount of the increase been slowing for a number of months, which suggests landlords understand that tenants have, or are, reaching an affordability ceiling, particularly given the uncertain economic climate.’[1]
Rental growth slows again in London
Two halves
The Rental Index from HomeLet has confirmed a year of two halves. During the opening half of 2016, UK rents rose at rates above 4%, with those in London hitting a peak of 6.2% during March.
However, since the summer, rental price inflation has slowed massively.
This year has seen a massive raft of changes for buy-to-let landlords. Increased stamp duty coming into effect in April saw landlords rushing to complete before the deadline. In addition, there have been changes in the Right to Rent guidelines and alterations to mortgage interest tax relief, to name but two alterations.
Mr Totty added: ‘It is difficult to think of a period when there have been so many external interventions in the private rental sector as yet seen during 2016: the impact of many of the changes are yet to be worked through and it’s unclear yet who will emerge as the winners and the losers.’[1]
[1] http://www.propertyreporter.co.uk/landlords/rent-rises-slow-down-in-london.html