UK rents have fallen for the first time in eight years, mirroring a similar dip in the housing market.
According to HomeLet’s May rental index, rents across the UK have fallen 0.3% in the year to May – the first drop since December 2009. This took the average monthly rent of a new tenancy in May down to £901.
New tenancies on rents in London were 3% lower than this time last year.
The slowdown in the London market has seen average rents fall from £1,572 a month last July to £1,502 in May. Last month’s 3.0% annualised fall was the steepest decline seen in the capital since 2009.
The pace of rental price inflation across the UK has been slowing in recent months, having peaked at 4.7% last summer.
Four other regions of the UK saw rents on new tenancies decline during May. The North East of England, the South East, Yorkshire & Humberside, and Scotland registered falls ranging from 2.3% to 0.6%.
The slowdown in the rental sector mirrors a similar picture elsewhere in the housing market.
According to Nationwide, house prices fell for the third consecutive month in May, the first time this has happened since the financial crisis was at its peak in 2009.
Monthly house price growth fell 0.2% in May, while prices dipped 2.1% on an annual basis, taking the average price of a property to down to £208,711.
Nationwide said the figures provided “further evidence that the housing market is losing momentum”.
HomeLet’s chief executive officer, Martin Totty, said: “May 2017 saw average rents nationally fall for the first time in eight years when the economy had suffered the shock of the financial crisis. HomeLet rental data suggests landlords are now facing a difficult balancing act between ensuring rents are affordable for tenants in a low real wage growth environment whilst covering their own rising costs.
“Tenants will still need a vibrant and growing rented sector to provide them with property options at the time of their choosing. Any constraint to the supply of rental properties, because landlords are unable to achieve the reasonable returns they require, cannot be in the long term best interests of tenants, especially if, as we’ve now heard from all the main political parties, the UK’s population continues to grow.”
Hannah Maundrell, editor in chief of money.co.uk, said that while the slowdown sounded like good news, it comes after years of steep hikes that have left rent unaffordable for many.
“It’ll be interesting to see how the rental market fares post-election as all of the larger parties have made bold pledges over housing market.
“While some may take the slowdown as proof the economy is about to take a turn for the worst; this may not necessarily be the case. It’s true that inflation is starting to hit pockets, and that skyrocketing rents has made life difficult for many. However, this could simply be the market evening out – the demand for rental property is certainly still there.
“On the plus side, this does shift the power away from landlords slightly and give tenants a little more negotiation power on price if they’re looking to move to a new property or renew their contract.”
Rental figures from the May 2017 HomeLet rental index
| Region | Average rent in May 2017 | Average rent in April 2017 | Average rent in May 2016 | Monthly variation | Annual variation |
| East Midlands | £614 | £604 | £595 | 1.6% | 3.3% |
| North West | £679 | £677 | £664 | 0.2% | 2.2% |
| South West | £803 | £802 | £787 | 0.2% | 2.1% |
| Wales | £605 | £610 | £594 | -0.8% | 1.8% |
| East of England | £909 | £904 | £904 | 0.5% | 0.6% |
| Northern Ireland | £609 | £614 | £606 | -0.9% | 0.4% |
| West Midlands | £658 | £661 | £656 | -0.5% | 0.3% |
| Yorkshire & Humberside | £614 | £619 | £618 | -0.7% | -0.6% |
| South East | £998 | £1,003 | £1,014 | -0.4% | -1.5% |
| Scotland | £622 | £632 | £634 | -1.6% | -1.9% |
| North East | £522 | £525 | £534 | -0.7% | -2.3% |
| Greater London | £1,502 | £1,519 | £1,548 | -1.1% | -3.0% |
| UK | £901 | £904 | £904 | -0.3% | -0.3% |
| UK excluding Greater London | £753 | £754 | £750 | -0.1% | 0.5% |
[box style=”4″]
What Mortgage has teamed up with London & Country to offer you expert advice on the right mortgage deal.
Whether you’re buying a new home, remortgaging to a new deal or buying an investment property, L&C can help – and you’ll pay no fee for their advice. To find out more, click here.
[/box]
