Rental growth in the UK slowed last year, but it’s set to rise again in 2017.
Overall growth slowed from 2.34% in the same period of 2015 with rents in London down by 0.31%, as reported by buy-to-let lender Landbay’s national rent review.
The national average rent payable rose to £1,188 per calendar month, an increase of £132 (but this figure is inflated by London prices, where rents reached a peak of £1,894 in April before falling in May).
Rental costs in the rest of England are up 2%, taking the average to £749, while London continues on its downward spiral. The East Midlands saw the most significant annual rise at 2.6%, followed by the North West at 2.03% and Yorkshire and Humberside is up 1.67%. All of these regions have seen rent prices grow at the fastest pace for at least five years.
It is thought that tighter affordability lending controls for buy-to-let borrowers from next month and the removal of mortgage interest tax relief later in the year look likely to restrict the supply of rental housing in 2017. As a result of this, rents are expected to rise faster than the pace of inflation next year, with growth likely to triple by the end of 2017.
Two major infrastructure projects in and around London – HS2 and Crossrail 2 - are also contributing to intense rental pressure for tenants living nearby. All of the critical HS2 stations north of London have seen rental growth above the overall national average of 8.8% in the five years since the route was confirmed in January of 2012.
As a result of the predicted growth throughout the UK, tenants will have little choice but to complete for what properties are on offer.
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