In their monthly Lettings Index, national estate agent Countrywide measure the changes of rental prices on a month-to-month basis.
The report revealed that in July rental growth slowed down across all of the country. London recorded its annual drop in rents since 2010 with a decrease of 0.5% over the last 12 months. The last time the capital experienced a decrease in prices was in November six years ago, when London’s rent averaged at £923. That’s 39% less than currently.
Shifting focus slightly, rents saw an increase of 1.5% in Great Britain overall. Whilst this still implies a growth it is at the slowest rate since 2012.
Although the demand from tenants went up across the country, the number of homes arriving on the market has slowed down or even reversed.
July saw 23% more homes available to rent in the UK than one year previously. At the same time, the capital saw an increase of 33%. This increase, to a certain extent, is being pushed by purchases by investors trying to beat the stamp duty surcharge that became active on April 1.
This increase in homes means that fewer deals have been agreed above asking price. Countrywide’s report states: “In July 2015 16% of tenants paid over the asking rent to secure a home compared to 7% in July 2016. In London the fall was larger, 11% of homes let for more than the asking price in July, down from 32% in July 2015.”
Johnny Morris, Countrywide’s Direct of Research said:
The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing. Stock levels were already running higher than usual due to investors bringing forward purchases in the rush to beat the stamp duty deadline in April. Added to that, uncertainty in the sales market in the run up to, and after the EU Referendum has caused more discretionary sellers to turn to the rental market.
While rental price growth has slowed, current market dynamics are likely to accelerate the growth of renting. It seems that with more stock and demand from tenants we will see the number of households renting increase in 2016.”