Posts with tag: rent prices

Rent Price Growth Continues the Slowdown Seen since 2015

Published On: September 20, 2018 at 9:01 am

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Rent price growth across Great Britain continued on the slowdown that has been seen since 2015 in August this year, according to the latest Index of Private Housing Rental Prices (IPHRP) from the Office for National Statistics (ONS).

The average price paid by a private tenant in Great Britain rose by just 0.9% in the year to August, which is unchanged from July 2018. This slowdown in the growth of private rent prices has been driven mainly by the downward trend seen in London.

Excluding London, the average rent price increased by 1.5% annually in August, which is also unchanged on the previous month.

London rent prices dropped by an average of 0.3% in the year to August, again unchanged from the rate recorded in July.

Supply and demand

The Royal Institution of Chartered Surveyors (RICS) reported in its August 2018 Residential Market Survey a continuing decline in new landlord instructions for the 23rd consecutive month. The organisation notes that the implication of this feedback is that the supply of new rental stock to the market is increasingly constrained, with demand remaining resilient.

Similarly, ARLA Propertymark’s (the Association of Residential Letting Agents) July 2018 report found that the supply of rental properties has decreased, while tenant demand was at its highest level for the year so far. These supply and demand pressures can take time to feed through to the IPHRP, which reflects price changes for all private rental properties, rather than just those newly advertised on the market.

Rent Price Growth Continues the Slowdown Seen since 2015

Rent Price Growth Continues the Slowdown Seen since 2015

By country 

The annual rate of growth for Wales in August 2018, 1.0%, is still marginally higher than the annual rate of change for England (0.9%) and Great Britain (0.9%). Wales showed a broad increase in its annual growth rate between July 2016 and the end of 2017, but has fallen back during 2018.

This slightly stronger growth in Wales may be a response to higher levels of tenant demand in the country, as reported by ARLA Propertymark.

In England, private rent prices grew by an average of 0.9% in the 12 months to August, which is unchanged from July 2018. When London is excluded from England, prices were up by 1.6% on average.

Rent price growth in Scotland stood at an average of 0.5% in the year to August, unchanged from July. The historic weaker growth since mid-2016 may be due to stronger supply and weaker demand north of the border.

The annual rate of change for Northern Ireland (1.7%) in June 2018 was higher than the other countries of the UK. Northern Ireland has seen an increase in its annual growth rate between the end of 2016 and the end of 2017, but has fallen back slightly in 2018.

Region-by-region

In London, rent prices were down by 0.3% in the 12 months to August, which is unchanged from July. However, the RICS reports that expectations are now positive in the capital for the first time since August 2016. This may feed through to the IPHRP over time.

The largest annual rent price growth of English regions was seen in the East Midlands in August (2.8%), up from 2.7% in July. The South West followed (2.1%), with the East of England in third place (1.9%).

The lowest annual rent price growth was in London, followed by the North East (0.2%).

Comments 

Kate Davies, the Executive Director of the Intermediary Mortgage Lenders Association (IMLA), responds to the index: “While rent increases are subdued over the last 12 months, it is likely that this will only be a temporary respite. The cumulative impact of successive government regulation implemented two years ago, namely the 3% Stamp Duty surcharge and the removal of mortgage interest tax relief, means we may soon start to witness a more pronounced impact on the sector. Reduced landlord investment could ultimately result in supply shortfall and upward pressure on rents.

“Regulatory demands have already led to an 80% fall in new buy-to-let investment from 2015 to 2017.  Our latest research has found that 35% of intermediary mortgage lenders have restricted lending to buy-to-let investors, as more landlords are failing to meet current eligibility criteria.

“The full impact of the changes has yet to work through – so now is not the time for the Government to introduce further change for the sector.”

Rents on Tenancy Renewals Growing at Over Double the Rate of New Contracts

Published On: September 18, 2018 at 7:59 am

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Latest Landbay Rental Index Reveals Best and Worst Areas for Growth in England

Existing Countrywide tenants are witnessing an increase in their rents, at over double the rate of new renters.

Figures provided by the agency’s branches revealed that the value of new tenancies at its branches during August was up 1% annually to £975 on average.

However, renters having their tenancies renewed at Countrywide experienced increases, with rents up 2.8% to £958 a month on average across the UK.

Wales witnessed the largest rise in rents on new tenancies, up 4.4% annually to £683, while outer London tenants saw a 4% increase on renewals to £1,587 on average.

Region Average New Lets Rent (pcm) New Lets YoY Rental Growth Average Renewed Lets (pcm) Renewals YoY Rental Growth
Greater London £ 1,702 -0.80% £1,765 3.20%
nner London £ 2,609 0.40% £2,705 0.80%
Outer London £ 1,530 -1.10% £1,587 4.00%
East of England £ 957 1.80% £914 3.50%
South East England £ 1,052 1.40% £1,014 2.80%
South West England £ 807 1.60% £778 2.40%
Midlands £ 689 3.30% £656 2.40%
North £ 648 1.70% £607 2.30%
Wales £ 683 4.40% £631 2.40%
Scotland £ 658 0.40% £631 2.40%
Great Britain £ 975 1.00% £958 2.80%
Great Britain (Excluding London) £ 789 2.00% £750 2.60%

HomeLet revealed rents on new tenancies increased by 0.9% in August to £947 per month, lower than the 1.3% annual growth reported in July.

When excluding London, the average rent in the UK is currently £786, up by 1.3% on last year, HomeLet claims.

The capital remained the area with the highest rents, at £1,632 monthly. This is up 1.4% annually and 1.1% on a monthly basis.

Moreover, Scotland saw the biggest annual monthly development at 5.6% and 2% respectively to £664 per month.

The North East experiences the biggest drops in rents, down 2.2% annually to £526, while Wales and the south-west and east of England also register annual declines.

Chief Executive at HomeLet, commented: “In contrast to house which show more noticeable cyclical variations over time, especially in areas of the country where the imbalance between demand and supply is more pronounced, UK-wide rents in August increased around 1% compared with both the prior month and the same month last year.
“Our data demonstrates that the rental sector is showing a return to the long-term trend of steady, often below-inflation price growth.
“This makes the private rental sector an attractive alternative to the risk of entering, or exiting, property ownership at the wrong point of the cycle for tenants, landlords and lenders.”

Region Aug-18 Jul-18 Aug-17 Monthly Variation Annual Varation
Northern Ireland £663 £653 £634 1.50% 4.60%
Scotland £664 £651 £629 2.00% 5.60%
Greater London £1,632 £1,609 £1,609 1.10% 1.40%
West Midlands £708 £701 £693 1.00% 2.20%
North West £717 £712 £703 0.70% 2.00%
East Midlands £639 £631 £617 1.30% 3.60%
Yorkshire & Humberside £645 £635 £630 1.60% 2.40%
South East £1,055 £1,041 £1,028 1.30% 2.60%
North East £526 £525 £538 0.20% -2.20%
Wales £617 £611 £626 1.00% -1.40%
South West £826 £818 £838 1.00% -1.40%
East Of England £913 £909 £926 0.40% -1.40%
UK Average £947 £937 £939 1.10% 0.90%
UK excluding Greater London £786

However, separate data from The Deposit Protection Service (DPS) claims tenants have seen rents fall annually for the first time since the global financial crisis in 2009, The DPS has used its own data to assess rental growth in the second quarter of 2018, finding rents in the UK fell 1.3% annually to £764 a month.
This is the first annual slide since the second quarter of 2009 at the time of the financial crisis. The DPS also found that rents in the UK have now fallen for two consecutive quarters, down 0.97% in the second quarter after a 0.54% slide in the first three months of 2018. This led the DPS to say the rental market was in recession, which seems like a strange way to describe cheaper rents for tenants.

Managing Director, Julian Foster at the DPS, said: “Following almost a year of low growth, the UK rental market is now in recession in almost every part of the country.
“On top of this, our prediction last quarter that rents would decline year-on-year in the second quarter for the first time since 2009 has proven accurate.
“There are clearly long-term issues with the sector that are having a substantial effect on growth, particularly in the capital, and it’s difficult to see this negative trend ending any time soon.”

Region average rent in Q2 2018 change since
Q1 2018 % change since
Q1 2018
London £1,289 -£36 -2.73%
South East £868 -£5 -0.56%
South West £724 £2 0.31%
East £801 -£7 -0.89%
East Midlands £583 -£8 -1.38%
West Midlands £616 -£9 -1.43%
Yorkshire £550 -£17 -2.95%
North West £595 -£1 -0.15%
North East £532 -£3 -0.48%
Scotland £646 £9 1.36%
Wales £577 -£2 -0.39%
Northern Ireland £542 £18 3.37%
UK £764 -£10 -1.30%

The Rental Market is in Recession for the First Time since the Financial Crisis, Reports The DPS

Published On: September 17, 2018 at 9:28 am

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The UK rental market is in recession for the first time since the Global Financial Crisis (GFC), according to the latest report from The Deposit Protection Service (The DPS).

Its latest figures, which are from The DPS Rent Index, show that, during the second quarter (Q2) of the year, the average UK rent dropped for a second consecutive quarter for the first time since 2009, falling by £7 (0.97%), from £771 per month to £764.

On an annual basis, the average UK rent also fell for the first time since the GFC, by £10 (1.30%), from £774 a month.

The Managing Director of The DPS, Julian Foster, comments: “Following almost a year of low growth, the UK rental market is now in recession in almost every part of the country.

“On top of this, our prediction last quarter that rents would decline year-on-year in Q2 for the first time since 2009 have proven accurate.”

He continues: “There are clearly long-term issues with the sector that are having a substantial effect on growth, particularly in the capital, and it’s difficult to see this negative trend ending any time soon.”

The two consecutive quarters of rent declines follow three quarters of low rent growth – the average rent price in Q2 2018 was cheaper than it has been since Q3 2016.

Outside of London, the average rent during Q2 was £671 per month, which is £5 (0.75%) lower than Q2 2017.

The average rent was lower during Q2 2018 than it was in Q2 2017 in every UK region, except Northern Ireland, Scotland and the South West.

Yorkshire experienced the greatest percentage decline in the average rent on an annual basis, of 2.95% (£17), from £567 per month to £550.

London, on the other hand, recorded the highest value decrease between Q2 2017 and Q2 2018, at an average of £36 (2.73%), from £1,326 a month to £1,289.

During Q2, the North East was the cheapest UK region to rent a property, at an average of £527 per month. It replaces Northern Ireland.

There’s some good news for tenants, as the average UK rent dropped as a proportion of the typical UK wage in Q2, from 32.56% to 32.13%.

The average rent fell for every type of property between Q2 2017 and Q2 2018, with terraced houses experiencing the greatest decline, of 2.98% (£21.78).

Which Part of Prime Central London is Performing Best for Rent Prices?

Published On: September 11, 2018 at 8:03 am

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Many investors will know that rental yields in prime central London are typically among the lowest in the UK. However, a new report from Knight Frank reveals the part of prime central London that is performing the best for rent price growth…

It’s true; while rental yields are generally quite low in prime central London, there are still attractive returns to be achieved in the heart of the capital.

New data from Knight Frank reveals that rent prices in Mayfair have increased by an average of 5% over the past 12 months. This is more than anywhere else in prime central London.

Public realm improvements and a series of high quality, new build developments have led to increased demand for homes in the area, the property firm reports.

The new research also reveals that the average length of a tenancy in prime central London has risen to more than 16 months over the past two years, owed in part to the fact that continuing uncertainty in the property sales market, around the trajectory for house price growth, means that tenants are more prepared to commit to longer tenancy periods.

The number of tenancies agreed per Knight Frank office in prime outer London rose to a three-year high in July, thanks partly to strengthening demand among corporate tenants.

Knight Frank’s report supports a separate study from Strutt & Parker, which found that take-up of new tenancies in prime central London in the second quarter (Q2) of the year rose significantly compared with the same period of last year.

If you own rental properties in prime central London, how have you seen the market shift in the past year?

For those of you thinking about investing in the heart of the capital, look at studies such as this one to determine the hotspots that you should be targeting.

Rents Record Biggest Month-on-Month Rise in over Two Years

Published On: September 10, 2018 at 8:22 am

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According to the latest Landbay Rental Index, rents have experienced their greatest monthly increase for 28 months, led by gains in the East Midlands.

On average, rental values increased by an average of 0.13% in August – the biggest month-on-month rise since April 2016, with the East Midlands, at an average of 0.32%, posting the highest monthly rise for an English region in 40 months.

The increase drives the average rent paid for a property in the UK up to £1,209 per month, dropping to £767 if London is excluded.

Rental growth on an annual basis also showed signs of a sustained recovery, with rents across the UK increasing by an average of 0.97% – the highest level seen since May 2017.

Rental growth in London continued to reveal a marked uplift last month, having been in negative territory for more than a year, before the first positive movement in April 2018.

Rents in the capital increased at the fastest pace in almost two years, rising by 0.44% in the year to August 2018. However, it is still some way off the average annual growth rate of 1.36%.

At a London borough level, rents have risen in 27 of the 33 boroughs over the course of the last 12 months.

Four London boroughs exceeded the average annual rental growth rate, including the City of London (2.25%), Bexley (1.48%), Southwark (1.48%) and Lambeth (1.44%)

John Goodall, the CEO and Co-Founder of Landbay, said: “The figures point to a possible start of sustained rental rises in the UK. Following a slowdown in rental growth, the changes are likely influenced by a number of regulatory and tax changes introduced over the past two years.

“As landlords begin to feel the pinch from these changes, combined with a reduction in the supply of new homes, the inevitable consequence is an upward pressure on prices.”

He adds: “The Government must start to see landlords as a vital part of the UK housing market, rather than an easy target for raising the coffers. Any further changes to regulation or taxation will only end up on the tenant’s door.”

England and Wales: Rents Remain Flat Despite Above-Inflation Rises Beyond London

Published On: August 31, 2018 at 8:00 am

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Average rents remained flat across England and Wales in July, despite inflation-beating rises in some areas.

Your Move data reveals that average rents in England and Wales remained at £861 per month during July.

The South West had the fastest growing rents in England and Wales, up 3.7% to £686 per month on average.

This is more than the current inflation rate 2.5%.

Tenants in the East Midlands also saw rents increase about the cost of living at 2.9% annually to £656 a month.

Furthermore, the East of England was the third fastest developing region, with rents rising 19% to £890 a month during July.

London remained the area with the highest rents, but registered a 1.2% fall year-on-year to £1,271.

The North East was the cheapest area and witnessed the biggest decline, with rents falling by 1.3% to £535 a month. In Wales, pieces dropped by 0.9% in the year to July, with the average rent at £588.

National Lettings Director at Your Move, Martyn Alderton, commented: “One benefit of the slowdown in the London rental market has been that it now shines the spotlight on other areas of England and Wales.

“The South West of England has been the stand-out region in the last 
year, with rents rising consistently in areas of high demand.

“Prices in the East Midlands and East of England have also increased strongly, showing there is demand for rental properties outside of London and the South East.

“London continues to have the highest rents, but there are still good 
pockets of value around the capital, particularly in areas further from the city centre.”