Residential rents in the UK increased by an average of 2.4% last year, an increase from 1.8% in 2016, taking the average rent to £960 per month, the latest index shows.
However, while rents rose a third faster than they did in 2016, rental growth was still behind the 3.2% recorded in 2015 and 4.9% recorded in 2014.
It also shows that London has moved from having the slowest rental growth in England to the fasters. Over the course of 2017 rents in London rose 3.2%, reversing the 0.8% fall recorded in 2016, taking the average in December to £1,706.
Scotland was the only region in Britain where rental growth outstripped London with rents up 3.3% to an average of £640 while rents in the South West increased by 2.8% to £795, in the Midlands by 2.7% to £673 and by 2% in the North of England to £625.
There was lower growth in Wales of just 0.6%, taking the average to £646, growth of 0.9% in the East of England to an average of £922 and a rise of 1.9% in the South East to £1,041. When London is excluded from the calculation rents increased as a whole by 2% in the rest of the country to £768.
The index also picks up on other trends in the lettings market. It shows that 46% of landlords increased the rent when re-letting their home, up from 37% in 2016 and there was a drop in the number of homes bought by landlords. In 2017 landlords bought 12.5% of homes sold, down from 14.7% in 2016 and 16.3% in 2015, a nine year low.
Indeed, between 2016 and 2017 the proportion of homes sold to landlords fell in every region, nowhere more so than in London. This means in the capital 5,400 fewer homes were bought by a landlord in 2017 than in 2016.
The biggest proportion of homes sold to a landlord was in the North East at 21.2% and the lowest in Scotland at just 8.3%. In the West Midlands it was 15.5%, in the North West 15.3% and in Wales 10.4%, the same as the East of England.
The falling number of landlord purchases has meant the number of homes on the rental market has dropped. In December 2017 there were 4% fewer homes to rent across Britain than in December 2016, with London recording a 21% fall, the largest of any region.
The number of homes to rent also fell steeply in the East of England with a drop of 15%, with Scotland down by 7%, the South West down by 6%, Yorkshire and Humber down by 5%, the East Midlands down by 3% and the North West of England down by 2%.
But homes to rent increase by 13% in Wales and by 12% in the West Midlands. In the North East of England they were up 6% and in the South East up by 5% year on year.
Despite the stamp duty hike induced fall in stock, there were 5% more homes available to rent than there were two years ago. However in London the number of homes on the market has dropped by a third.
‘Last year saw the rate of rental growth pick up to get closer to its long term average. Most of the rise comes from a pickup in rental growth in London, after falls in 2016. Rents rose across every region of Britain last year, although the north of England saw rents rise at a slower rate than they did in 2016,’ said Johnny Morris, research director at Countrywide.
‘Rental growth has been supported by a fall in the number of homes on the rental market, with the biggest fall in London. It looks like increased competition between tenants for rental homes will drive faster rental growth in 2018,’ he added.