The rental market remains steady in the face of the various economic and political headwinds the sector has faced recently, according to new figures from the HomeLet Rental Index, widely considered the most comprehensive data available on the UK’s private rental market.
The index has been redesigned to incorporate additional data on new tenancies, as well as capturing nuances such as property type and location based on expert new mythology and independent advice from Stephen Gibbons, a professor of economic geography at the London School of Economics. It shows that rents on new tenancies continued to increase at a modest rate across most parts of the UK over the three months to August.
According to the research, the average cost of a new tenancy in the private rental market in the UK rose by 3.1% to £913pcm in the three months to August 2016, up from £885pcm in August 2015.
The August 2016 HomeLet Rental Index reveals that rents continue to rise in almost every area of the country, with 11 out of the 12 regions surveyed recording an increase over the year to the end of August, with the North East the only region to see annual rents fall, down 1.6% year-on-year.
But while the overall pace of rent rise remains sustainable, it is moderating. The 3.1% increase recorded in August is comparable to annual increases of between 3.5% and 3.8% over the previous four months, with the biggest slowdown recorded in London and the South East. By contrast, annual rental inflation was running at close to 6% this time last year.
Martin Totty (left), chief executive of Barbon Insurance Group, HomeLet’s parent company, said: “The latest Index reflects a market in which landlords are engaged in a delicate balancing act: they’re aware of tenants’ concerns about affordability while also conscious of the need to achieve target yields. August’s figures suggest that rents are continuing to rise at a sustainable pace – ahead of price inflation, but well below house price increases, which were running at close to 6% according to the most recent data.
“In the medium to longer term, the fundamental driver of rents will be the balance between demand and supply for rented property. We expect demand in the private rental sector to continue to grow, in line with demographic changes such as population growth, and as affordability concerns remain in the house purchase market, so it is important that we see efforts to support supply.”