The average asking rent across the UK – excluding London – rose by just 0.7 per cent in 2017 according to figures released this morning by Rightmove.
This is a much more muted increase than the annual rises recorded in 2015 when rents rose 3.7 per cent, and in 2016 when they increased by 3.0 per cent.
Over the last three years tenants have therefore seen landlords increase asking rents by 7.6 per cent – around £50 per month on the typical rent.
The asking rents of new rental properties coming to market in London are rising again, leading to the first increase in the annual rate of growth since the start of 2016.
Rightmove says the uplift comes following a few years of the market readjusting downwards from the very large annual rise of 8.0 per cent recorded in 2014.
The falling rents were also aided by the surge in rental supply in 2016 from landlords who had rushed to buy up properties to rent out before the additional stamp duty on second homes came in. As supply has tightened prices have started to increase again.
The south east seems to be mirroring the downward trend we saw in London, with the region ending the year down 0.7 per cent on 2016. The overall regional trend masks some of the key commuter areas that continue to perform strongly, with Farnham in Surrey coming top for rental price growth in 2017, up 9.0 per cent on 2016.
“Nationally rents have been holding pretty steady over 2017, retaining the 3.0 per cent-plus rises seen in both 2015 and 2016, and adding a more modest 0.7 per cent in the last 12 months” says Rightmove director and housing market analyst Miles Shipside.
“Increasingly stretched tenant affordability, and the surge of buy to let property supply beating the stamp duty tax hike deadline, have acted together to mute landlord pricing power. In contrast, after a few years of falling rents in London they’re back on the up again, due to a combination of tightening stock available to rent and strong demand.
“While the 2017/2018 tax year will see the start of the government’s changes to tax relief on buy to let mortgages, we don’t think this first phase will have that much of an effect on many landlords’ portfolio decisions until another year down the line. From speaking to some landlords they’re unlikely to make any decisions to sell up until they see in real-time how much of an impact it has on their finances, with many choosing to take a wait and see view rather than looking at short-term gains or losses.
“However, agents report that there are some highly-geared landlords with large loans looking to reduce their exposure to loss of tax relief by cashing in and selling some properties” concludes Shipside.