Eight-month run of falling rents comes to an end as UK growth doubles

A run of eight consecutive months of falling rents in London came to an end last month, according to Countrywide.

The UK’s largest estate agency group reports that average rents in the capital ended July 2.1% higher than in the same month last year.

Countrywide suggests that this rise is down to a shortage of available properties to rent.

Across the whole of the UK, meanwhile, rental growth doubled from 1.1% to 2.2% between June and July.

Nationwide price growth has been driven by the positive London figures as well as increased rental growth in the south of England.

The South West, East of England and Greater London were three of the four top performing regions.

The total number of homes to rent across the UK ended July 4% higher than the previous year, although the rate of growth has slowed in each of the last 10 months.

In London (-18%), the East of England (-6%) and the South East (-5%) there were fewer homes on the market than last July.

Countrywide suggests that the significant fall in the number of homes available to rent in London has been driven by a drop in the number of landlords buying properties since April 2016 when a 3% stamp duty surcharge on the purchase of buy-to-let properties was introduced.

Just 10.5% of the homes sold in the capital last month were bought by a landlord, the lowest level since August 2010 (9.7%) and half the 2015 average (20.9%).

Yesterday, the Residential Landlords Association reported that less than a fifth of landlords said they are planning to buy additional buy-to-let properties over the next year.

“The rush to beat higher stamp duty rates in April 2016 caused a spike in the number of homes to rent, but that has now worked its way through the market,” explains Johnny Morris, Countrywide’s research director.

“The stock of homes to rent is now falling in the more expensive parts of the country because higher tax rates have dissuaded large numbers of landlords from buying.”

“Across the Midlands and the North, higher rates of stamp duty are much less of a disincentive to investors.”

“Here the number of homes on the market remains up on last year, buoyed by investors living in London and the South East choosing to buy in the Midlands and the North,” adds Morris.

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