Rents in the UK crept up slightly in the year to August, but it seems the biggest hikes are being seen when tenants are renewing their existing tenancies.
Estate agency giant Countrywide has released new figures showing that landlords are raising the rents on tenancy renewals at more than double the rate of rental growth for new listings.
The figures show a 1% rental price increase across the private rented sector for new property lettings in the year to August, compared to a 2.8% rise for renewals – although the average new monthly rental price is still higher at £975 per consecutive month (pcm), compared to average renewed lets at £958pcm.
When taking London out of the equation, the average monthly rent in the UK according to Countrywide is now £789 a month for new lets and £750 a month for renewals – with a year-on-year increase of 2% and 2.6% respectively.
Why the difference?
In Greater London, newly listed rentals have seen their values dip by an average 0.8% over the past year to £1,702, while renewals have seen a huge 3.2% growth in monthly rental prices, bringing them to £1,765 which goes against the national trend of new lets being more expensive than renewed contracts.
While the reason behind the national rental disparity is unclear, it could be that landlords who are first listing properties are trying to keep prices lower in order to entice more tenants, while those who already have a tenant in place may have started on a lower rent in the first place and now feel comfortable that they can increase it in order to improve their profit margins – particularly as Section 24 tax changes will be affecting some landlords.
It could also be down to more tenants choosing to stay put for longer rather than looking for new accommodation, meaning that landlords are having to keep their newly listed property prices down due to lower demand. On the flip side, in places like London, the number of landlords offering private rented properties could be dwindling slightly, meaning tenants have less options to move to.
Return to steady growth
HomeLet has also released its latest rental price figures which show that the average UK tenant – excluding those in London – now pays £786 a month, which is a 1.3% rise compared to this time last year, while in Greater London rents have been put up by an average 1.4% compared to August 2017, hitting £1,632pcm.
Martin Totty, chief executive at HomeLet, said: “In contrast to house prices, which show more noticeable cyclical variations over time, especially in areas of the country where the imbalance between demand and supply is more pronounced, UK-wide rents in August increased around 1% compared with both the prior month and the same month last year.
“Our data demonstrates that the rental sector is showing a return to the long-term trend of steady, often below-inflation price growth.
“This makes the private rental sector an attractive alternative to the risk of entering, or exiting, property ownership at the wrong point of the cycle for tenants, landlords and lenders.”