The pace of rental growth has more than halved since the 3% stamp duty hike was introduced last year to curb the buy-to-let market.
According to the latest Landbay Rental Index, annual UK rental growth slowed to 0.90% in March, way below the rate of 2.27% seen at the end of March 2016.
The average rent paid in the UK has now reached £1,191 – £1,880 in London and £752 outside of the capital.
However, while average UK rents continue to rise – albeit at a slower pace – in London they fell for the eleventh consecutive month.
Landbay said that in the capital annual rental growth dropped by -0.70%, nearly four times less than the pace of rental inflation in March 2016.
Average rents in the London boroughs of Kensington & Chelsea, Westminster and Camden have seen the most significant fall in rents over the last twelve months, going down by 3.65%, 2.64% and 1.49% respectively.
In contrast, rents within the boroughs of Barking and Dagenham, Havering and Bexley have grown by 2.72%, 2.70% and 2.25% as demand for properties in the outer boroughs of the city increases.
In the rest of the UK, while rents continued to rise, the speed at which they are growing lagged to 0.11% in March, the slowest monthly rate since February 2013.
Rents in England (without London), have seen the most substantial growth over the last year, growing by 1.86%, followed by Wales (1.41%) and Scotland (1.25%). Just Northern Ireland saw rental growth below the UK annual average of 0.9%, growing by 0.07% over the last twelve months.
Paul Brett, managing director of intermediaries at Landbay, said: “The last 12 months have been tough for the private rented sector, a period marked by the stamp duty surcharge last April, followed by changes to mortgage interest tax relief, tighter underwriting criteria and the pending ban on letting agent fees.
“While the figures suggest that the government has had some success in its efforts to rebalance through the interventions outlined above, policy makers should be wary of imposing any further regulation. The private rented sector is a crucial part of the housing mix and needs to be supported by landlords, tenants, housebuilders, lenders and the government alike.
“Playing the blame game will simply deter further investment and set the housing market off course for good. What is now needed are positive measures aimed at encouraging the development of high quality rented properties, a step change outlined in the recent housing white paper.
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