Annual rental price growth in the UK slowed to just 0.7% in November, down from 0.9% a month earlier, HomeLet’s latest Rental Index shows.
The index, which is based on new lets agreed by landlords and agents using HomeLet’s service, reveals that the average rent agreed on a new tenancy signed in November was £904 per calendar month (pcm), up from £898pcm in the corresponding month of last year.
But landlords are feeling the pain from rising inflation, with the latest figures from the Office for National Statistics showing that inflation in the UK, as measured by the Consumer Prices Index, currently stands at 3.1%.
November’s data means that rents have reduced in real terms for almost the whole of 2017.
The last time that average rental price growth exceeded inflation was December 2016, when the HomeLet Rental Index recorded an increase of 1.7% against a CPI reading of 1.6%.
However, the headline rental figure masks a lot of regional variation, with price growth particularly strong in the East Midlands, Northern Ireland, the South-West of England and the North-East of England which all recorded annual rental price inflation in excess of 3% during November, which means landlords are having very different experiences of the buy-to-let market depending on where they own property.
By contrast the data shows that rents dropped in three regions, with Greater London, the East of England and the South-East of England all recording negative figures.
If we strip out the effect of London rents, where prices have dropped 0.2% to £1,530pcm, from the national picture, rental price inflation across the UK would have been 1.1% last month rather than 0.7%.
On a monthly basis, comparing November to October, average rents fell in 10 out of 12 regions of the UK last month, with only the South West and the North East in positive territory.
Last month’s 0.7% rate of annual rental price inflation compares to an average of 2.8% in November 2016, some four times’ higher.
Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company, said: “So far this year we have seen very modest rental price inflation; rents are now higher than a year ago in most parts of the country, but there has been no return to the more rapid increases we last saw during the first half of 2016.
“HomeLet’s monthly data continues to support a picture of modest increases in rents over 2017 and, in most instances, a reduction in real terms against the backdrop of underlying higher inflation.”