Rents Rising at Slowest Rate for Six Years

It will be no surprise to many of our landlords, that the rate at which rents have increased over the course of 2017 has slowed down.

In some cases, where landlords have had tenants in their property for several years, when they have come to re-let the property, they have found that the amount of rent they can achieve may even have declined slightly from their current rent.

 

This was confirmed by the latest report from the Office of National Statistics in their report for December 2017.

 

The main headlines from The Index of Private Housing Rental Prices for December are:

 

•        Private rental prices paid by tenants in Great Britain rose by 1.2% in the 12 months to December 2017. This is the lowest annual growth since the series began in January 2012.

 

•         In England, private rental prices grew by 1.3%, Wales saw growth of 1.7% while Scotland saw rental prices increase by 0.4% in the 12 months to December 2017.

 

•        London private rental prices grew by 0.4% in the 12 months to December 2017, that is,

0.8 percentage points below the Great Britain 12-month growth rate.

 

 

 

 

Not surprisingly, this decline in growth was far more severe in London than in other parts of the country.

 

A recent YouGov survey suggested that of the 25m households in the UK, 5m households are in private rented accommodation (or 20%), and this is set to rise to 25% by 2021.

 

Whilst this may seem a little contradictory, why has rent growth slowed, if more people are renting property, there are several reasons for this.

 

Firstly, there has been a slow down in the property market overall. House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchases all remained flat. This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy.

 

This uncertainty has also been fuelled by the election and Brexit in 2017, resulting in many people choosing not to move.

 

Those that have chosen to move, have selected the best value and the best quality properties they can find, resulting in strong competition to attract tenants that are moving to the available properties on the market.

 

For landlords, this means presenting your property to the market in the best possible condition to attract the best tenants, and the best rents.

 

House prices and rental values are expected to continue to grow in 2018, supported by the ongoing shortage of properties for sale, low levels of housebuilding, high employment and a continuation of low interest rates making mortgage servicing affordable in relative terms.