Rents in the UK are not surging ahead as some had predicted with the latest lettings index showing that they rose by an average of just 0.8% in February compared to the same month in 2016.
This marks a considerable decline in the pace of rental appreciation which was 4.7% in June last year and the month on month rise is well below the general rate of inflation which is currently 1.8%.
The figures from the HomeLet index show that the average rent is now £895 per calendar month which is just 0.8% higher than a year ago. While in London the average rent is £1,520, some 0.4% up year on year.
A breakdown of the figures show that the average rental value has fallen or remained flat in four out of 12 regions. Rents in the South West are unchanged at £791 both month on month and year on year and in the North East they were unchanged year on year and down month on month to £524.
In Scotland average rents were down 1.5% month on month to £597, some 0.8% below a year ago. In Wales they fell by 0.6% month on month to £602 but are still up 2.1% compared to a year ago and in the South East rents were down 0.2% year on year to £992 but increased month on month in February by 0.3%.
The strongest rental market has been Yorkshire and Humber where average rents are up 3% compared to a year ago to £623 and up 1.3% month on month. The East Midlands has been solid with rents up 1.2% year on year and d 0.3% month on month to £896.
There had been much talk of buy to let landlords raising rent prices to cover added costs including mortgage tax relief change and the planned ban on letting fees in England, but the report suggests that they are likely not to do this in 2017.
Research from HomeLet shows that over half of the 3,726 landlords surveyed expect to have to raise rents in the face of mounting cost pressures but 29% plan to defer this to 2018 and it suggests that landlords appear to be acutely conscious of the need to ensure rents are affordable for tenants.
The survey also underlines landlords’ determination to maintain their strong relationships with tenants with 96% of landlords saying they are happy with their current tenants.
‘Our research again demonstrates that the vast majority of landlords have positive working relationships with their tenants. In recent months, we have seen landlords treading very carefully with rental price rises, amid concerns about tenants’ ability to pay. With 21% of landlords blaming an increase in their tax liability for raising rents, it remains to be seen if this can be sustained,’ said HomeLet’s chief executive officer Martin Totty.
The research found that 31% of landlords said that further changes is now their biggest concern and Totty said that they will hope that the Chancellor Philip Hammond does not announce further changes to the tax system or legislation in his Budget next week.