Rent price growth continues to slow across Great Britain, with the average price paid by tenants in January up by 1.1% on an annual basis, down from 1.2% in the previous month.
The latest figures, from the Office for National Statistics (ONS), indicate that this slowdown has been driven mainly by a decline in rent price growth across London since the end of 2015.
The annual rent price growth rate in January excluding London was 1.6%, down from 1.7% in December 2017. The growth rate for London (0.2%) in the 12 months to January was 0.9 percentage points lower than that of Great Britain as a whole. This is the lowest annual rent price growth recorded in London since October 2010, when it was also 0.2%.
The December 2017 Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) shows that tenant demand continued to fall at the end of last year, although at a slower rate than the previous month, while new landlord instructions declined at a slightly faster rate.
The Association of Residential Letting Agents (ARLA) reported in its Private Rented Sector Report for December that the number of agents witnessing rent increases for tenants remained at its lowest level since its records began in January 2015.
In England, private rent prices rose by 1.1% in the 12 months to January, down from 1.3% in December 2017. This rate of growth is the lowest since December 2010.
For Wales, rent price growth (1.4%) is still higher than the annual rate of change in England and Great Britain. Wales has shown a broad increase in its annual growth rate since July 2016.
Rent price growth in Scotland stood at 0.3% in the year to January, down from 0.4% in December. This continued weaker growth may be due to historical stronger supply and weaker demand north of the border.
Growth in private rent prices in London was 0.2% in the 12 months to January, down from 0.4% in December. The RICS reported in its November 2017 Residential Market Survey that near-term expectations are still negative for the capital – an ongoing trend stretching back to August 2016.
Focusing on the English regions, the highest annual rent price growth in January was recorded in the East Midlands (2.6%) – unchanged from December. This was followed by the South West (2.1%), which is also unchanged.
The lowest rate of growth was seen in the North East (0.0%), down from 0.1% in December. It was followed by London (0.2%).
Kate Davies, the Executive Director of the Intermediary Mortgage Lenders Association (IMLA), comments on the index: “These figures reaffirm how private housing rental prices have been subdued in recent years.
“In the face of continuing imbalance between supply and demand, investment in the private rented sector (PRS) has up to now kept pace with demand. This is an impressive performance on the part of our nation’s landlords, especially given the quality improvements the PRS has also enjoyed.
“However, as was highlighted in IMLA’s latest white paper on buy-to-let, there is evidence that recent intervention by the Government and regulators – such as the rise in second home Stamp Duty and rental income tax changes – is having an impact on landlords and investors, leading them to take a more cautious approach. The impact of these changes may take time to work through, but will likely be felt over several more years.
“Today’s figures show that the buy-to-let sector is not immune from economic pressures: policymakers should refrain from imposing further costs on the sector.”