Rental growth nearly doubled in Great Britain over the last 12 months – from 1.1% in November 2018 to 2.1% in November 2019, according to data from Hamptons International.
The average rent of a newly let home in November 2019 rose to £989 pcm, £20 more a month compared with the same time last year.
Southern regions recorded the strongest rental growth, with rents in the South West increasing 4.2% year-on-year in November, followed by the South East (4.1%).
Meanwhile the North recorded the weakest rental growth of 0.2% following last month’s fall, followed by Greater London (1.1%). London has recorded the weakest, or second weakest rental growth in November of the last four years.
The falling number of landlord purchases over the last few years has meant the number of homes available to rent has dropped, particularly in London and the South, and this lack of new supply has driven rental growth. There were 7.8% fewer properties available to rent during the first 11 months of 2019 compared with the same period last year. In the South of England however, where more landlords have sold up, there were 11.7% fewer homes available to rent.
Although landlord purchases have remained subdued throughout the year, there are signs that investors are starting to return to the market, particularly in London. During the first 11 months of the year, landlords bought 11% of homes sold in Great Britain, the same level as last year, but 5% lower than in 2015. But in November alone, the proportion of homes bought by investors increased to 12%.
London recorded a bigger rise in landlord purchases. Landlords purchased 13% of homes sold in the capital during the first 11 months of 2019, up from 11% during the same period of 2018. This was the first rise since 2015, but is in part due to fewer owner-occupiers transacting in the market.
Aneisha Beveridge, head of research at Hamptons International said, “Rental growth in Great Britain accelerated throughout 2019, moving back towards its long-term average. Average rents rose 2.1% in November 2019, nearly double the rate recorded last year. While rents rose in every region, the South led the way.
“Rental growth has been driven by a decrease in the number of homes available to rent. The tax and regulatory changes announced in 2016 have resulted in fewer landlord purchases, particularly in the South, causing some landlords to sell up.
“Landlords purchased 11% of homes sold in Great Britain so far this year, 5% less than the peak in 2015. However, after four years of falls there are now signs that landlords are beginning to return to the market – particularly in London where house price falls and steady rental growth are gradually enticing investors back.”