According the Hamptons International Monthly Lettings Index for August rents on newly-let homes in the capital fell for the third consecutive month, down 0.8% year-on-year, despite there being 21% fewer homes available to rent.
However, growth on renewed tenancies went up by 3.2% year-on-year in London with 3.7% more tenants staying put than last year.
Affordability stretched
Hamptons said problems with affordability and a lack of choice was among the reasons London tenants were sticking with their current homes.
Across Great Britain the picture was different with rents on newly-let homes outside of London increasing 2% year-on-year.
But renewed tenancies were still the stronger growth area with 2.5% more across Great Britain than last year. It means rental growth on renewed tenancies went up 2.8% – the highest level in ten months according to Hamptons.
Aneisha Beveridge, analyst at Hamptons International, said: “Despite low stock levels, rents on newly-let properties (homes advertised on the open market to let) fell in London for the third consecutive month.
“Moving is costly for both tenant and landlord. In a period of uncertainty, where tenants’ incomes and landlords’ yields are squeezed, more tenancies are being renewed.
“With affordability stretched and less choice available on the open market, more tenants are choosing to stay put. And with landlord yields under pressure for high property prices and tax changes, fewer landlords want to run the risk for looking for a new tenant and suffering void periods.”
Low stock
It’s not just yields and tax changes which have affected the figures. Hamptons revealed, while newly-let rents are falling in London, stock levels are also on a downward slope. This was because of the introduction of stamp duty surcharges on second homes in April 2016 which led to landlords selling considerably more buy-to-let properties than they had purchased.
Hamptons said, so far this year, there were 6% fewer homes to rent in Great Britain than in the same period last year. But in London stock levels were down 21%.
Meanwhile, across Great Britain the average rent of a new let rose to £975 pcm in August 2018.
Beveridge added: “Rents outside London continue to rise. Wales and the Midlands have driven rental growth outside the capital to increase 2.0% year-on-year, the strongest growth in nine months.”
