Rental inflation hits 12-month low

Rents on new tenancies fell for the third month in a row during September, putting annual rental inflation at the lowest level this year, HomeLet says.

The HomeLet Rental Index for September found rents across the UK rose just 3% over the past 12 months.

Tenants signing up to a new agreement during September agreed, on average, to pay £910 per month in rent, which while up annually, represents a monthly reduction of 0.8%.

Rental price inflation has slipped from a high point of 4.5% in March 2016 and the rate of increase has now fallen in each of the past three months.

Despite these figures, every region of the UK, except Scotland and the north-east, has seen an increase over the past 12 months, HomeLet said.

Martin Totty, chief executive of HomeLet, said: “Landlords are being very careful to ensure rents remain affordable for tenants.

“Despite factors such as higher Stamp Duty on purchases for buy-to-let investors, and the tax changes coming in from April 2017, it would appear so far landlords have absorbed any actual or expected decreases in their yields, rather than pass this on through higher rents.

“Whether those impacted can afford to continue to keep rents stable may depend on other variables, such as mortgage interest rate movements. These tend to be determined by factors such as general inflation outlook and central authority interest rate responses.

“It seems a complex cocktail of external factors could now begin to play a role in determining the future direction of rents in a ‘pre-Brexit’ economy.”


Region Average rent in September 2016 Average rent in August 2016 Average rent in September 2015 Monthly variation Annual variation
West Midlands £665 £667 £630 -0.4% 5.6%
East of England £904 £907 £864 -0.4% 4.7%
Wales £609 £616 £585 -1.2% 4.1%
North West £683 £679 £657 0.6% 4.0%
Northern Ireland £594 £596 £576 -0.4% 3.2%
Greater London £1,555 £1,561 £1,510 -0.4% 3.0%
Yorkshire & Humberside £621 £626 £607 -0.8% 2.2%
East Midlands £602 £602 £590 0.1% 2.1%
South East £1,020 £1,048 £1,003 -2.6% 1.7%
South West £799 £818 £790 -2.2% 1.2%
North East £530 £534 £530 -0.7% 0.0%
Scotland £610 £614 £621 -0.6% -1.7%
UK £910 £918 £884 -0.8% 3.0%
Notes: Based on new tenancies in September 2016 Based on new tenancies in August 2016 Based on new tenancies in September 2015 Comparison of average rent in September 2016 and August 2016 Comparison of average rent in September 2016 and September
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