The latest report from Homelet has revealed that rental price inflation has returned in the UK, rising by 1.1%.
According to the data, rents in the UK rose by an average of 1.1% during July, a return to positive inflation following two successive months in which rents fell. The average rent agreed on a new tenancy signed during July was £925 according to the July HomeLet Rental Index, compared to £915 in the same month of 2016.
July’s 1.1% annual increase compares to declines of 0.3% and 0.2% in May and June respectively, the first time rents had fallen in the UK since 2009. Nevertheless, inflation in the private rental sector continues to lag the general rate of inflation, which was 2.7% in June, the latest month for which official data is available.
The Greater London rental property market continues to act as a brake on the UK as a whole, with rental inflation in the capital now running at -0.6% a year according to the July HomeLet Rental Index. July was the fourth successive month in which London saw rents fall, and while the pace of decline is now slowing – July’s figure compares to a 2.9% drop in June – the capital’s rental market still looks transformed compared to this time last year, when rents were rising at a rate of 6.6%.
Outside of London, rental price inflation is significantly stronger, with nine out of 11 regions beyond the capital seeing higher rents last month. Rents rose fastest in Northern Ireland (up 5.7% compared to July 2016) and Scotland (3.6%), with only the South East (-0.9%) and the North East (-1.7%) recording declines. As a result, rental price inflation across the UK but excluding London is now running at a much faster rate of 1.6%.
HomeLet’s data suggests landlords now feel more confident than in the Spring about seeking higher rents on their properties – but also that they remain very aware of tenants’ ability to pay. The July data may also reflect a decrease in the number of homes coming onto the rental market, with research from organisations such as the Association of Residential Letting Agents suggesting fewer landlords have acquired new rental properties in recent months. A similar effect has been seen in the housing market, where weaker prices stabilised in July as fewer properties were put up for sale.