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One-bed rental properties continue to rise in value

Wednesday 12th October 2016

The latest Landbay Rental Index has revealed that the average rent for a one-bed property in the UK rose by 0.12% in September, bringing year-on-year growth up to 1.57%.
 
Meanwhile, rents for two and three-bed homes also increased in September, but at slower rates (0.09% and 0.11% respectively).
 
In the aftermath of June's Brexit vote, overall rental growth has showed signs of easing slightly, down from 0.12% in August to 0.09% in September. 
 
Throughout the UK, it was Scotland witnessing the highest demand for one-bed properties, growing by 0.36% last month. This was closely followed by East England (0.35%) and the East Midlands (0.29%). 
 
In London, by contrast, one-bed rents were flat in September, while all-bed rents dropped by 0.04% in the capital. 
 
These figures come hot on the heels of a call by Housing Minister Gavin Barwell, at the recent Conservative Party Conference in Birmingham, for lower minimum space requirements for new build properties in order to make them more affordable for first-time buyers. 
 
“Housing has been high on the political agenda this week, and it seems that policy makers are resolute in their ambitions to make home-ownership more affordable for people across the UK,” John Goodall, CEO and founder of Landbay, commented.
 
“There’s no denying most people aspire to own their own home, but it’s critical that efforts to bolster the country's housing stock don’t overlook the importance of the buy to let market for a supportive and sustainable housing market.”
 
He added: “RICS’ forecast that 1.8 million more households will be looking to rent by 2025 is a stark reminder of the scale of future demand for the rental market. The fact remains that those building up toward a house purchase rely on a well-served buy to let market to ensure that excessive rental growth doesn’t dampen their purchasing power.”
 
This challenge, he said, is exacerbated by record low interest rates. While low interest rates may make mortgage borrowing cheaper for those able to buy a home, it also means that house prices and rents are growing more quickly than the money people have saved in bank and building society accounts. 
 
“The overall picture is one of moderating rents, which is good news for those in shared accommodation, but an under supply of one-bed properties will continue to restrict the ability for aspiring homeowners to save up for a house of their own,” Goodall concluded. 
 
Rents across the UK increased by a modest 0.09% in August, bringing annual growth to 1.65%. Rental growth was seen across all regions except London and the North East. As things stand, the average UK rent is now £1,187. In London, the average rent is £1,891, with the rest of the UK standing at £747 per month.
              

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