Rents across the UK have begun to shrink for the first time in more than five years, dragged down by London, research claims. However, the fall is so tiny that it could not be smaller, and is driven by the London market. Elsewhere, rents are up.
Figures from buy-to-let lender Landbay’s National Rent Review, based on analysis of around 100,000 advertised and agreed rents on Zoopla and ONS data going back to 2012, show rents fell 0.01% in November.
This is the first time rents have declined across the UK for five years, Landbay claims.
But the drop has been attributed to a slowdown in the capital, where 26 of the 33 boroughs have experienced falls.
The average rent paid for a UK property has grown by 0.53% so far in 2017 to £1,196, with falling rents in London – dropping 0.83% to £1,870.94 – weighing down otherwise resilient rental growth elsewhere of 1.27%.
The average figure for UK rents excluding London is now £759.
However, the slowdown in rental growth has not been consistent across the country. The east midlands has seen a 2.13% increase this year to £622.59, while the south-west is up 2.13% to £746.18.
John Goodall, chief executive of Landbay, said: “Landlords have faced up to challenge after challenge over the past two years, from stricter regulation, reductions to tax relief, and a significant Stamp Duty tax hike when buying a buy-to-let property.
“One would expect this pressure to push up rents, but two key factors have allowed them to shoulder these rapidly rising costs: the Bank of England’s enduring Term Funding Scheme (TFS), which has injected a significant sum of cheap capital into banks, together with record low interest rates, which have also kept borrowing costs low.
“With interest rates now rising, and the TFS coming to an end in February, we expect upward rental pressure to be just around the corner.
“Without a radical house-building plan for purchase as well as purpose-built rental properties, rental prices are in danger of soaring over the coming decades.”