Renting in London:average monthly rents fell in 2016 - but are predicted to start rising again in 2017

A rise in the number of available properties led to average monthly rents falling in London, and slowing across the rest of the UK in 2016...

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Average rents fell in London in 2016 but are predicted to start rising again this year, so now could be a good time for renters to make the move.

In December, the average rent in the capital stood at £1,246 a month, almost three per cent - or £37 a month - less than the year before, according to the latest Countrywide monthly lettings index.

It was a similar story across the UK, with rents growing by a modest 1.6 per cent to an average of £927 per month - the lowest annual increase for seven years.

While every region saw an increase in rental properties, London saw the biggest growth, with 22 per cent more homes available to rent compared to 2015, providing tenants more choice and negotiation power.

Stamp duty changes and the Brexit effect
Stamp duty changes led to buy-to-let landlords rushing to buy before the April 2016 deadline, after which there was an influx of homes to let on the market and an immediate increase in the average time it took for landlords to find tenants.

Market uncertainty caused by the Brexit vote also played its part. 

"Discretional landlords who might have otherwise sold have decided to keep their properties, waiting for activity to pick up in the sales market," says research director at Countrywide, Johnny Morris.  

"Likewise, wealthier property owners moving home are a little more likely to keep hold of the home they might have otherwise sold, waiting to see what happens in the sales market."

2017 forecast
However, Morris forecasts that we're likely to see increased rents this year as squeezed yields, fewer tax breaks and higher stamp duty rates are likely to deter landlords from snapping up more rental properties.

Rightmove's Q1 rental report tells a similar story and predicts asking rents will rise by four per cent outside of London, driven by less availability of rental stock resulting in upwards price pressure for tenants.


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