Homelet – Rents in UK rose on average 1.7% in December
Data from the latest Homelet Rental Index revealed that rents in the UK rose on average 1.7% in December. The second half of 2016 saw a considerably slower rate of rental growth compared to the same period in 2015.
Average rental values have increased in eleven out of twelve regions in the UK compared to the same period last year, in the second half of 2016 rents in Greater London have seen a slower pace of growth than last year.
Martin Totty, HomeLet’s Chief Executive Officer, said: “While demand for rental property remains strong, landlords always have to be mindful of tenants’ ability to pay higher prices. The data recorded by the HomeLet Rental Index during the second half of last year suggests we have now begun to approach an affordability ceiling, particularly in areas of the country where rental price inflation was previously highest.
“While the industry has speculated that landlords will increase rents to mitigate the impact of factors such as the impending reductions in mortgage interest tax relief, this may prove problematic given the pricing trends we’re currently seeing in the market and the potential for higher inflation and a squeeze on real earnings in 2017.
“The private rented sector is now having to cope with a series of disruptive elements, just at a time of great economic uncertainty, and amid a continuing systematic imbalance between supply and demand for residential property. The assumption that landlords have sufficient means to bear higher costs will soon be tested. Tenants must hope they do.
“The fact that the areas of the country where rental price inflation was previously highest were the areas in which rent increases dropped back most significantly in the second half of last year adds weight to the idea that an affordability ceiling is now becoming an issue. Landlords and letting agents are clearly being cautious.”
Read the Homelet Rental Index report December in full click here.