Rents ceased to rise in June, despite increasing at this time of year for the last five years.
The slowdown has been attributed to a surge in first-time buyer activity,
The latest Buy-to-Let Index from LSL Property Services plc showed that the average rent in England and Wales remains the same as in May, at £737 per month.
This comes after monthly rental inflation has been slowing for a number of months, and compares to an average 0.8 per cent monthly increase in June over the five years since 2008.
The continued slowdown leaves rents only 2.6 per cent higher than in the same month last year – below the rate of CPI inflation (2.9 per cent).
The number of new tenants in June also indicated a slightly cooler rental market. Across England and Wales there were 0.8 per cent fewer new tenancies in June than in May. However, activity has still seen strong annual growth. The number of new lettings in June increased by 3.5 per cent compared to the same month in 2012.
Regional variation remains. Five out of ten regions saw rents rise in June. The sharpest monthly increase was in the East Midlands, where rents have risen 0.7 per cent since May. Second fastest were the North West and South West, with average rents in both regions seeing a 0.5 per cent monthly rise.
London remains the region with the fastest annual rent rises, up 6.4 per cent from a year ago. However June’s figure is much slower than the recent peak of 7.9 per cent rental inflation registered in the capital in March. The East Midlands experienced the second fastest annual rises, with rents up 3.4 per cent in June, followed by the North East with rents on average 2.5 per cent higher than a year ago.
David Brown, commercial director of LSL Property Services, comments: “The proportion of households in the private rented sector is still growing strongly, a trend that’s set to continue for the foreseeable future. Yet with better access to finance in the first half of this year, the immediate picture has become far brighter for tens of thousands of first-time buyers. And now these green shoots are starting to bear fruit for those still renting too, as milder competition for tenancies has kept a lid on the cost of renting”
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