Rent prices fall for the first time since 2010
Rent prices in London have fallen for the first time since 2010, signalling a slowdown in the pace of rental price increases across the UK. According to the latest data from lettings network Countrywide, the average monthly rent for a new let in the capital was £1,280 in July, which is £7 lower than a year earlier.
This marks the first annual decline in London rent prices since November 2010, when the average rent stood at a significantly lower £923. In contrast, rents across the UK saw a more modest rise of 1.5% year-on-year, the slowest rate of growth since 2012. The average monthly rent for a new let in the country was £951 in July.
Several factors are contributing to the cooling of rental prices. Earlier this year, many landlords rushed to purchase buy-to-let properties ahead of an increase in stamp duty by three-percentage-point, which came into effect on the 1st of April. This influx of new properties onto the rental market has provided tenants with more choice, helping to reduce upward pressure on rents.
The growing availability of rental properties has also reduced the frequency of deals being made above the asking price. In July 2015, 16% of tenants in the UK paid more than the asking rent to secure a property; by July 2016, this figure had dropped to just 7%. In London, the reduction was even more pronounced, with only 11% of homes let for more than the asking price, down from 32% in the same month the previous year.
Rents in Scotland and Wales also saw slight declines. In Scotland, the average rent was £689 in July, down from £696 in the previous year, while in Wales, the typical rent fell from £685 to £671.
Johnny Morris, director of research at Countrywide, said that while rental price growth has slowed, the number of households renting is expected to rise as increased stock and demand continue to shape the market in 2016.
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