This is why
UK rental price inflation fell for the first time in almost eight years in May, new data from HomeLet reveals. The average rent on a new tenancy commencing in May was £901, 0.3 per cent lower than in the same month of 2016. New tenancies on rents in London were 3 per cent lower than this time last year.
May’s decrease in average rental values marks a significant moment for the rented property sector. This is the first time since December 2009 the HomeLet Rental Index has reported a fall in rents on an annualised basis. The pace of rental price inflation across the UK has been slowing in recent months, having peaked at 4.7 per cent last summer.
In addition to the fall in rents in the capital, four other regions of the UK saw rents on new tenancies decline during May. The North-East of England, the South-East, Yorkshire & Humberside, and Scotland registered falls ranging from 2.3 per cent to 0.6 per cent. HomeLet’s regional data is available in more detail via an online interactive infographic.
The slowdown in the rental sector mirrors a similar picture elsewhere in the housing market, with Nationwide Building Society revealing in June that house prices had fallen in each of the past three months.
The slowdown in the London market has seen average rents fall from £1,572 a month last July to £1,502 in May. Last month’s 3.0 per cent annualised fall was the steepest decline seen in the capital since 2009.
HomeLet’s CEO, Martin Totty said: “May 2017 saw average rents nationally fall for the first time in eight years when the economy had suffered the shock of the financial crisis. HomeLet rental data suggests landlords are now facing a difficult balancing act between ensuring rents are affordable for tenants in a low real wage growth environment whilst covering their own rising costs.
“Tenants will still need a vibrant and growing rented sector to provide them with property options at the time of their choosing. Any constraint to the supply of rental properties, because landlords are unable to achieve the reasonable returns they require, cannot be in the long term best interests of tenants, especially if, as we’ve now heard from all the main political parties, the UK’s population continues to grow.”
Rental figures from the May 2017 HomeLet Rental Index
|Region||Average rent in May 2017||Average rent in April 2017||Average rent in May 2016||Monthly variation||Annual variation|
|East Midlands||£614||£604||£595||1.6 per cent||3.3 per cent|
|North West||£679||£677||£664||0.2 per cent||2.2 per cent|
|South West||£803||£802||£787||0.2 per cent||2.1 per cent|
|Wales||£605||£610||£594||-0.8 per cent||1.8 per cent|
|East of England||£909||£904||£904||0.5 per cent||0.6 per cent|
|Northern Ireland||£609||£614||£606||-0.9 per cent||0.4 per cent|
|West Midlands||£658||£661||£656||-0.5 per cent||0.3 per cent|
|Yorkshire & Humberside||£614||£619||£618||-0.7 per cent||-0.6 per cent|
|South East||£998||£1,003||£1,014||-0.4 per cent||-1.5 per cent|
|Scotland||£622||£632||£634||-1.6 per cent||-1.9 per cent|
|North East||£522||£525||£534||-0.7 per cent||-2.3 per cent|
|Greater London||£1,502||£1,519||£1,548||-1.1 per cent||-3.0 per cent|
|UK||£901||£904||£904||-0.3 per cent||-0.3 per cent|
|UK excluding Greater London||£753||£754||£750||-0.1 per cent||0.5 per cent|
|Notes:||Based on new tenancies in May 2017||Based on new tenancies in April 2017||Based on new tenancies in May 2016||Comparison of average rent in May 2017 and April 2017||Comparison of average rent in May 2017 and May 2016|
HomeLet rental index regional variance figures for May 2017