HomeLet : UK rental price inflation continues to slow, despite rising costs

Rental price inflation in the UK has now fallen below the general rate of inflation, the latest data from the HomeLet Rental Index reveals, as landlords peg rents affordable for their tenants.

Rents in the UK rose by an average of just 0.8 percent in February compared to the same month of 2016, HomeLet’s data shows; well below the general rate of inflation, which is now running at 1.8 percent according to official statistics.

The decline in the pace of rental price appreciation, which was 4.7 percent as recently as June 2016, may become a concern for landlords. New research released by HomeLet reveals over half of the 3,726 landlords surveyed expect to have to raise rents in the face of mounting cost pressures. However, almost a third of those (29 percent) plan to defer this to 2018.

The survey results point to a dilemma for many landlords. On one hand, factors such as April’s impending tax changes threaten to raise costs for many. On the other, landlords appear to be acutely conscious of the need to ensure rents are affordable for tenants; demonstrated by the slowing rate in rental price inflation recorded over the past six months by the HomeLet Rental Index.

The survey also underlines landlords’ determination to maintain their strong relationships with tenants, with 96 percent of landlords saying they are happy with their current tenants.

Commenting on the research, HomeLet’s Chief Executive Officer, Martin Totty said: “Our research again demonstrates that the vast majority of landlords have positive working relationships with their tenants.

“In recent months, we have seen landlords treading very carefully with rental price rises, amid concerns about tenants’ ability to pay. With more than one in five landlords (21 percent) blaming an increase in their tax liability for raising rents, it remains to be seen if this can sustain.  Landlords will hope the Chancellor does not make it harder for them to continue supporting their tenants in this way, with further changes to the tax system or legislation, as he prepares to unveil his Budget on the 8th March.”

Totty added that many landlords will be anxious. “HomeLet’s landlords survey shows that, for almost a third of landlords (31 percent), the prospect of further changes in legislation is now their biggest concern.”

Rental figures from the February 2017 HomeLet Rental Index

Average rent in February 2017
Average rent in January 2017
Average rent in February 2016
Monthly variation
Annual variation
Yorkshire & Humberside
£623 £615 £604 1.3% 3.0%
Northern Ireland
£604 £602 £589 0.3% 2.5%
North West
£677 £673 £661 0.7% 2.5%
£602 £606 £589 -0.6% 2.1%
East Midlands
£596 £583 £586 2.3% 1.8%
West Midlands
£660 £658 £650 0.2% 1.5%
East of England
£896 £893 £885 0.3% 1.2%
Greater London
£1,520 £1,497 £1,514 1.6% 0.4%
North East
£524 £527 £524 -0.7% 0.0%
South West
£791 £791 £791 0.0% 0.0%
South East
£992 £989 £994 0.3% -0.2%
£597 £606 £603 -1.5% -0.8%
£895 £888 £888 0.7% 0.8%
UK excluding Greater London
£746 £743 £740 0.4% 0.9%
Based on new tenancies in February 2017 Based on new tenancies in January 2017 Based on new tenancies in February 2016 Comparison of average rent in February 2017 and January 2017 Comparison of average rent in February 2017 and February 2016

Source: HomeLet

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