Average rent continues to grow, but increases are slowing

Average rent continues to grow, but increases are slowing [Photo: miluxian via iStock]

Tenants across the UK taking on new rental properties are still seeing prices increase as we approach the summer months, but will be welcoming the news that growth in rental costs is slowing down and starting to come in line with house prices. 

In the three months to the end of May, according to the latest report released this week by HomeLet, prices were increasing more steadily, and were going up at roughly the same rate as house prices themselves, leaving the average rental price across the nation at £771 per calendar month, excluding London, and £1,563 per calendar month in Greater London. 

This means that in the three-month period, the average rental price across the UK climbed by 4.4 per cent when compared to the same three months a year ago, while Greater London has experienced a level of growth amounting to 6.2 per cent in the same timescale. 

HomeLet said that the data shows good results and strong positives for both landlords and tenants at the moment. It said that landlords were expecting the worst heading into this quarter, largely because many believed that the rise in rental stock at the start of April would mean more competition and lower prices. This has not been the case, however, and the returns and yields they enjoy have continued to improve. 

From the tenants' point of view, slower rental growth in line with house prices means that they are not facing the same high rises in price that they were some months ago, and it looks good for the rest of the year for those looking to get themselves a rented property. 

"While this growth has begun to slow, which tenants will welcome, landlords will also be encouraged by the vote of confidence in the sector evidenced by the increase in buy to let completions in the past few months," said Martin Totty, chief executive officer of Barbon Insurance Group, HomeLet’s parent company.

"Short term factors can and do have an impact on the marketplace. As a market leader in tenant referencing, HomeLet has seen a noticeable increase in the applications for new tenancies, immediately after the rush to complete buy-to-let property purchases ahead of last month’s increase in Stamp Duty rates," he added.