Rents in London continued to drop at the start of this year, while across the country rental asking prices have been rising at the slowest rise in three years.
The average cost of renting a home in the UK remained almost the same as at the start of 2016, rising just 1.8 per cent, compared to the 3.9 per cent annual growth recorded a year ago, thanks to a significant increase in the number of properties available.
The 12 per cent jump in the number of rental homes available compared to the same period in 2016 has been caused by last spring’s spike in buy-to-let purchases, which saw investors rush to beat the stamp duty surcharge on second properties.
Wider choice for tenants means properties are taking longer to let than this time last year, which is pushing prices down, according to a report from Rightmove.
“The supply boost following last year’s buy-to-let frenzy in the first few months of the year has continued through to 2017, introducing more competition in the market,” says Sam Mitchell, Rightmove’s head of lettings.
RENTAL AFFORDABILITY IN LONDON
In London, where rents are by far the most expensive in the country, prospective tenants saw prices fall 4.2 per cent year on year, yet the average cost of a two-bedroom home in the capital has now reached £1,937 per month.
Rents in the capital continue to eat up a significant portion of renters’ incomes following a decade of steady growth in which rents have risen by more than 30 per cent, while wages have gone up by only 18 per cent on average in the same period.
Separate research from Clydesdale and Yorkshire Banks found that almost a third of Londoners aged between 18 and 40 do not save any money in an average month because of the high cost of rent.
LONDON RENTERS ARE COMMUTING FURTHER
The five areas with the highest demand for rental homes in the first quarter of 2017 were all in traditionally cheaper neighbourhoods attracting renters priced out of more central areas.
Bexleyheath (average monthly rent £1,113) and Belvedere (£1,086 per month), both in the south-east London borough of Bexley, were the two most popular areas for renters, while Hainault (£1,314), Hornchurch (£1,276) and Rainham (£1,189) completed the top five.
“It’s a trend we’ve been seeing for quite some time. As rents in central London have become higher and less and less affordable, you’ve seen tenants moving further out to where they can find more affordable rents,” says Mitchell. “It’s not uncommon for tenants to commute increasingly long distances.”
NOW COULD BE THE TIME TO MAKE YOUR MOVE FOR CHEAPER RENT
However, Londoners may now find it easier to negotiate a rent reduction as properties are taking a week longer to let now than they were this time last year.
And while rents have fallen annually thanks to the increased number of homes available, Mitchell warns that forthcoming tax changes are likely to encourage many landlords to sell up, taking their homes out of the rental market.
“If you think you’re paying too much rent, now’s the time to move because every indicator is pointing towards rents going up over the next couple of years,” he says.