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Renting has become more affordable since Brexit vote

Wednesday 19th October 2016

Average UK rents increased by 3% in the 12 months to September – the slowest annual growth rate recorded this year, according to the latest figures from HomeLet.
 
The insurance firm has revealed that the average monthly rent on a new tenancy during September was £910, which represents an annual rise of 3% and a monthly reduction of 0.8%.
 
Annual rental growth was at a high of 4.5% during March and has now fallen in each of the past three months, says HomeLet.
 
It says that there have been modest rental decreases in many parts of the UK – something which could indicate that affordability thresholds have been reached.
 
During September, average monthly rents were higher in ten out of 12 UK regions when compared to the same month in 2015.
 
Scotland (-1.7%) and the North East (unchanged) were the only two regions not to record annual growth last month when compared with September last year. 
 
Meanwhile, the highest annual rental growth was recorded in the West, where rents were 5.6% higher during September 2016 when compared to 12 months previously.
 
Other strong performing areas on an annual basis included the East of England, Wales and the North West.
 
Only two regions – the East Midlands (0.1%) and the North West (0.6%) - recorded monthly growth between August and September.
 
The largest monthly drop-offs, meanwhile, were recorded in the South East (-2.6%) and the South West (-2.2%).
 
“Landlords are being very careful to ensure rents remain affordable for tenants. Despite factors such as higher Stamp Duty on purchases for buy-to-let investors, and the tax changes coming in from April 2017, it would appear landlords have absorbed any actual or expected decreases in their yields, rather than pass this on through higher rents,” says Martin Totty, HomeLet’s chief executive.
 
“Whether those impacted can afford to continue to keep rents stable may depend on other variables, such as mortgage interest rate movements."
 
Totty adds: “Landlords and tenants alike will need to monitor the market carefully as we get closer to the April 2017 reduction in tax relief on buy-to-let mortgage interest."
 
"The recent trends in rental values appear to be changing, which may yet prove beneficial for both tenants and landlords if it reflects some rebalancing between yields and affordability."
              

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