Rents continued to rise in July, albeit at a slower rate, data from HomeLet has revealed.
The tenant referencing and insurance provider’s July Rental Index shows average rents on new tenancies in the UK (excluding Greater London) were £779 per month, 2.3% higher than a year ago, while they were up 4% in London to £1,599.
In comparison, the June index showed average new rents in the UK excluding London were 3.5% higher annually at £773, and up 3.9% in the capital to £1,575.
East Anglia had the biggest monthly and annual increase at 3.7% and 9.7% respectively to £897 a month during July.
Meanwhile, Scotland had the biggest monthly drop at 3.7% to £676 and the north-east saw the biggest annual fall, slipping 5% to £537.
Martin Totty, chief executive of HomeLet parent company Barbon Insurance Group, said: “Ultimately, rents will be determined by supply and demand in the private rental sector; what we know here is that population growth will continue to increase demand, and that the housing stock isn’t growing quickly enough to meet that demand.
“However, with rents ultimately limited to a tenant’s ability to pay, rents are likely to continue to climb, albeit at the slowing pace noted most recently.”
He said it was too early to spot trends since the Brexit vote, adding: “It seems likely that with lenders concerned about the prospect of falling house prices, loans to value in the mortgage market are going to become less generous, which may see more people turn to the rental sector rather than buying a property.
“However, it’s possible we may also see renewed interest in the London rental market as foreign investors seek to pick up investment property to make the most of the big exchange rate advantage following the fall in the pound.
“We may also see foreign investment increase outside the capital, in other cities across the UK.
“This coupled with recent figures showing that the number of people becoming home owners is falling across the country, means the demand for rental accommodation is likely to remain strong.”