July’s countrywide lettings index shows that rental growth slowed across every region of the country. London recorded the first annual drop in rents for six years, falling by 0.5 % over the past 12 months.
. Rents in London 0.5% lower than in July 2015
. Stock surge sees the number of homes available to rent in Great Britain rise 23%
. Demand from tenants increases too, with 10% more searching for a home to rent
. Rents across Great Britain rise by 1.5% with the fastest growth in Northern England
While tenant demand has increased nationally, the volume of homes coming onto the rental market has slowed or in some cases reversed rental growth. In July there were 23% more homes available to rent in the UK than at the same time last year, while the capital saw a rise of a third. Some of this increase has been driven by purchases rushed through to beat the stamp duty deadline, however the number of homes available to rent has continued to rise in recent months, particularly in London and the South East.
An increase in the number of homes on the market has meant less deals are agreed above asking rents. In July 2015 16% of tenants paid over the asking rent to secure a home compared to 7% in July 2016. In London the fall was larger, 11% of homes let for more than the asking price in July, down from 32% in July 2015.
In July the average rent in the UK was £951 a month, up 1.5% on last year, but rising half as fast as in July 2015. Rents in London (-0.5%), South East (-1.1%), Wales (-2.0%) and Scotland (-1.0%) are now lower than they were in July 2015. Across the North and Midlands, the rate of rental growth hit the highest level for two years.
Commenting Johnny Morris, Director of Research at Countrywide plc said: “The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing. Stock levels were already running higher than usual due to investors bringing forward purchases in the rush to beat the stamp duty deadline in April. Added to that, uncertainty in the sales market in the run up to, and after the EU Referendum has caused more discretionary sellers to turn to the rental market.
“While rental price growth has slowed, current market dynamics are likely to accelerate the growth of renting. It seems that with more stock and demand from tenants we will see the number of households renting increase in 2016.”