New statistics released today indicate that rents on new tenancies continued to rise in the second quarter of 2016.
The latest HomeLet Rental Index shows that the price of a new tenancy in the UK, excluding Greater London, rose by an average of 3.5% during the last three months. Rents for new tenancies currently stand at £773 per month.
However, the figures represent a fall from the 4.4% annual rise noted in the three months to May.
Rental rises
Data from the Index shows that rental prices rose in 10 out of the 12 regions of the UK. This growth was led by East Anglia and the East Midlands, where rents were up by 8.2% year-on-year. Scotland came next, with rental gains of 7.4% over the same period.
In London, the average rent on a new tenancy is presently £1,575, up 3.9% year-on-year. This said, rental prices slowed from the 6.2% growth seen in the previous month.
Of all the UK regions, the North East and North West were the only ones to see a drop in yearly rents, which were down by 3.6% and 0.2% respectively.
Encouragement
The data from the HomeLet Rental Index will give encouragement to both landlords and tenants alike. This follows the increase of rental stock, following the surge to purchase properties ahead of the higher stamp duty rate, which came into force on April 1st.
Martin Totty, chief executive of Barbon Insurance Group, parent company of HomeLet, noted, ‘the June HomeLet Rental Index shows that the rental market remains resilient in the face of the various economic and political headwinds the sector has faced recently. Landlords are continuing to secure rental growth whilst there are some early signs of affordability criteria beginning to bear on the rates of rental price growth.’[1]
UK rents for new tenancies rise in Q2 of 2016
Brexit uncertainty
‘The impact of the EU referendum vote will now play out over the months ahead: if, as expected, the result acts as a restraint on the supply of new housing, the gap between demand and supply in the private rental sector will remain market; all the more so if more people decide to rent while waiting to see what happens to house prices,’ Totty added.[1]
Concluding, he stated that, ‘landlords will be considering their position carefully, particularly in the light of further taxation changes to come next year, which could reduce net yields; with long-term drivers such as net population growth still in place, it is likely that rents will continue to rise, though affordability will continue to be crucial. The recent slowdown in rental growth rates may suggest an affordability ceiling is being approached.’[1]
[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/rents-continue-to-rise-across-the-uk