- Rentals in the UK fell 0.8% in the past three months
Rentals in the UK fell 0.8% in the past three months
Average rent in the UK fell 0.8% from April to June, according to a quarterly report from the Department of Rental Market Statistics.
Thus, the annual growth rate of rents will decrease to 1.1% compared to the 2019 figure of -1.7%.
However, property prices in the regions outside London continue to rise.
- Where does the rent rise and where does it fall?
The rental market is driven by diverging supply and demand trends between London and the rest of the UK.
Rentals - excluding London - rose 2.2% over the year as demand continues to outpace supply in many markets. It ranges from 1.5% in the West Midlands to 3.1% in Wales.
Only six of the 64 cities tracked by the rental index have shown rents declines over the past year (Swindon, Coventry, Middlesbrough, Northampton, London, and Aberdeen), and six more recorded more than 4% growth (Rochdale, Sunderland, Bristol, Preston, York, Leicester).
But the rise in the number of homes for rent in London and Edinburgh, which is becoming increasingly popular with renters, has not been matched by a similar level of demand. And this leads to lower rents and the growth rate of rents in these two cities.
The increase in supply and the weakening of demand in the capital led to the fact that rents fell by 3% since the beginning of the year, and over the past 12 months - by 1.4%.
The biggest changes in rental prices are seen in central London, where work from home policies and travel and tourism bans during quarantine have impacted demand for rental properties.
This is the second time that rents in London have fallen into negative territory in the past three years. In March 2017, rents decreased by 2.8% compared to the same period last year after the introduction of a 3% stamp duty in 2016.
Meanwhile, annual rental growth in Edinburgh, the UK's second most popular tourist destination, slowed to 0.2% from 4% a year ago, as declining tourism and policy changes affect landlords and home rentals.
- What is rental demand?
Overall demand for rental homes is 33% higher than pre-quarantine and 25% higher than 2019 levels across the UK.
This was likely triggered by deferred demand from tenants whose plans were put on hold during the housing market close, as well as other tenants who may have used insulation to re-value their home and lifestyle.
At the same time, the number of rented houses has increased since the end of quarantine. It is now slightly ahead of seasonal trends: last year, the number of homes for rent in the UK grew by 7%.
How affordable is rent now?
Affordability has remained largely unchanged in recent years, with the exception of London, where the share of income needed to cover average monthly rent fell from 54% to 45% in September 2014.
-What can we expect until the end of 2020?
Annual growth in rents outside London is expected to halve in the UK from 2.2% to 1% by the end of the year, and in London by the end of 2020 the annual decline will be 5%.
Back to news
Would you like to share the page with your friends?
Would you like to write a comment on the page?