Rental growth in England, not including London, dropped to 1.18% in the year to May 2018, representing the smallest annual increase in five years, according the latest figures from the Landbay Rental Index.
The last time annual rental growth was at this level was in April 2013, when rental prices increased by 1.16%. In contrast, annual rental growth peaked in November 2015, reaching the highest level recorded at 2.63%, though this figure gradually slowed each month and has since returned to 1.18%. The current average monthly rental cost for a property in England stands at £769, excluding the capital. However, when taking London into consideration, the figure rocketed to £1,234.
The report revealed that rental growth outside of London remained positive and, despite the slowing pace, rents have increased by a cumulative total of 10.32% over the past five years. Rents in East England have seen the most considerable growth during this time, growing by 14.67%, closely followed by the East Midlands where rents have increased by 12.83%. The North East has seen the smallest level of growth, with rents rising by just 1.9% over the same period.
Annual rental growth in London has been below zero for 17 consecutive months, though this has been trending back towards zero since July 2017, falling by only -0.08% in the year to May. London rents have still risen by 6.88% over the past five years and, with 17 of the 33 London Boroughs now reportedly in positive territory, the capital looks set to make a recovery to positive growth in the coming months.
Landbay CEO and co-founder John Goodall said: “Landlords have been faced with a number of challenges over the past two years, from stricter regulation, reductions to tax relief, and a significant stamp duty tax hike when buying a buy-to-let property. Some might have expected this pressure to push up rents, though low interest rates and the Bank of England’s Term Funding Scheme (TFS) have kept the cost of borrowing down and allowed landlords to shoulder some of the costs.
“With a rate rise being just around the corner, and the TFS now having ended, things could be about to change. While we are unlikely to see an immediate impact, the pace of rental growth may well speed up in the latter half of this year as landlords look to price in the changes that have been building up for some time.”
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