Do you know why?
The news is out about property rentals in London and, depending on which side of the fence you’re on, it’s either exceedingly good or distressingly bad. It’s not just London, but all over the UK that rents are falling for the first time in almost a decade, with prices in the capital seriously affected.
Perhaps it’s the ongoing uncertainty over Brexit that’s causing lingering UK property market jitters. Perhaps it’s Mrs May’s backfiring election gamble. Whatever the reason, average monthly rentals in the UK as a whole have fallen 0.3 per cent in the past year (May 2016 to May 2017) and are now standing at around £901 on average compared to the previous £904, new data from landlord-services firm HomeLet reveal.
While that’s a small drop and not much of a worry for landlords or their tenants, in London, the plunging picture amid overall stagnating growth becomes more pronounced. Here, new rents have dived 3 per cent in the last year and are now averaging around £1,502 a month, instead of £1,572 a year ago, the figures reveal. That represents a saving of some £70 a month for those renting flats or houses, while landlords are losing out on that amount; a worrying prospect for landlords with substantial property portfolios.
Other areas of the UK that were impacted by falling rents on new tenancies included the northeast and southeast of England, Yorkshire, Humberside and Scotland, with declines of between 0.6 per cent and 2.3 per cent.
HomeLet chief executive officer, Martin Totty said landlords in London and around the UK were being forced to offer more attractive rents, but that lowering them could eat into their revenues and profits.
“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,” he said.
“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.”
Totty added that market demand in the rental sector was a vibrant and growing area that matched the needs of those wishing to rent properties. “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,” he said.
Meanwhile, John Horton of Horton and Garton, one of the top estate agents in Hammersmith, says the onus is now firmly on landlords and those offering property management services to them and their tenants to provide the kind of assistance they require.
“All too often we find landlords are not getting what they want with the big firms, especially those that operate their customer services from call centres,” he said. “They want in-house property management services so they know they can quickly deal with problems and emergencies as they arise. This helps to keep their tenants satisfied and protects revenues.”
It’s not just rents, either. The entire UK property market is also feeling the squeeze, with house prices continuing to tumble as 2017 progresses and potential buyers adopt a cautious outlook that’s seen as not connected to the recent and tumultuous general election. That’s at least according to the Chief Economist at Nationwide, Robert Gardner, whose firm commissioned the survey.
He said it “provides further evidence that the housing market is losing momentum. Moreover, this may be indicative of a wider slowdown in the household sector, though data continues to send mixed signals in this regard”.
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