First Autumn rental price standstill as South East records annual fall
- National asking rents outside London dropped by 0.2% in the third quarter of 2017, the first drop recorded at this time of year
- Drop fuelled by the South East with rents down 2.3% on last quarter, and down annually for the first time, due to steadily increasing supply since last year’s second home stamp duty changes
- In London asking rents are at their lowest at this time of year since 2013, though a drop in supply and increased demand could mean rental prices will start to rise again soon
- Properties taking 8% longer to find a tenant outside London and 5% longer in London than in Q3 2016
We usually see asking rents for new properties coming on the market increase in the third quarter of the year, as historically it’s one of the busiest times for tenants looking for a new place. This year however, whilst demand is still strong, rents are pretty much at a standstill, down slightly by 0.2%. The national standstill comes as a result of South East prices dropping by 2.3%, and down annually for the first time over the past six years, at -1.9%.
Rightmove’s Head of Lettings Sam Mitchell explains: “Since last April’s second home stamp duty changes came in the supply of new rental properties in the South East has been steadily increasing, up 5.5% on this time last year. Agents are reporting that some investors looking for better yields are shifting their focus from London to instead buy in the surrounding counties of Surrey, Berkshire and Buckinghamshire. The increase in stock in the South East has led to softening in rents in some areas where there is less competition among tenants, but they are holding up in key commuter areas where tenant demand is strong.”
Asking rents in London have continued their downward trend this month, and are now actually at their lowest at this time of year since 2013, at an average of £1,920. New listings are down 3.7% in London on Q3 last year, the only region in the South to see a drop in new supply.
Mitchell continues: “Last year the supply of rental properties in London increased as much as 26% when investors rushed to buy ahead of the stamp duty changes, leading to cooling rents over the last 12 months in the capital. Now it appears that rental investors are starting to move their money away from London with a number of agents across London saying that investors are being replaced by first-time buyers. This is likely to constrict rental supply in the capital and lead to rents increasing again, so now would be a good time for prospective tenants to act, before this happens.”
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