New rent rises ‘could be landlords passing on charges’

Rents in the UK rose by an average of 2.1 per cent during September according to HomeLet.

HomeLet says last month’s rise continues the trend towards higher rents seen in recent months following a period in which rental price inflation was very low or even negative.

The average rent agreed on a new tenancy signed last month was £927 says HomeLet, compared to £908 in the same month of last year.

September’s increase reflects higher rents agreed on tenancies in almost every area of the country, with only the south east of England recording a negative rate of annual rental price inflation.

The highest increases in rents were seen in Northern Ireland, where rental price inflation hit 4.3 per cent in September, followed by the West Midlands (3.9 per cent) and the East Midlands (3.7%).

Rents also rose in London for the second month running after a four-month period in which annual rental price inflation had slipped into the red. Rents in the capital were 1.9 per cent higher last month than in September 2016, with the average tenancy agreed in London last month costing £1,593.

Yesterday, Rightmove released its quarterly lettings sector figures showing that rents outside London dropped 0.2 per cent in the third quarter of this year – again the south east was the worst peforming region, dropping 2.3 per cent on the previous quarter. Rightmove also said properties were taking eight per cent longer to find a tenant outside London and five per cent longer in London than at this time last year.

Commenting on this morning’s HomeLet data, chief executive Martin Totty says any rent increases may now reflect landlords passing on their own higher costs. “It wouldn’t be surprising if landlords, seeing their own current and anticipated cost increases, seek to pass these costs on to tenants to preserve the returns from capital they have invested in residential property assets.”

He adds: “This may prove to be the start of that upward movement, especially if tenants are left competing for fewer rental properties because some landlords decide the returns from property investment are being eroded by factors beyond their control.”

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