Rents in Great Britain fall in February, the first annual drop since November 2010
February’s Countrywide Lettings Index shows that rents in Great Britain were lower than in the same month last year, the first annual drop since November 2010. Nationally rents fell 0.6% over the last year (table 2). In February, the average rent in Great Britain was £921 a month, £5 less than in February 2016 (table 2). But rents are still £112 (14%) a month more than their previous peak in 2007.
The fall in the average national rent was driven by London and the South East where the cost of a new let fell 4.7% and 2.6% respectively (table 2). It has taken seven months for falls in these regions to bring the national rental growth figure below 0%. Apart from London and the South East, every other region of the country saw rents continue to rise, albeit at a slower rate than last month. Outside London rents rose 0.8% year-on-year, but the rate of growth slowed in nine of the eleven regions in Great Britain. The East and West Midlands were the only regions recording faster rental growth in February than in January.
The slowdown in average rental growth is driven by a fall in the number of tenants looking for a home combined with higher numbers of homes available to rent in London and the South East. While in Great Britain there were 5% more tenants looking for a home than at the same time as last year, London (-3%) and the South East (-5%) both had fewer tenants looking than last year (table 1). There was more tenant demand in every other region of the country with the biggest increases in the East Midlands, the East and the North West.
The surge in the number of homes available to rent following the rush to beat the stamp duty deadline is now beginning to subside. There were 10% more homes available to rent nationally in February 2017 than last year (table 1) but the rate of growth has halved since last month. London, the South East, the South West and the East of England were the only regions to record double digit growth in the numbers of homes available to let (table 1). The increased level of stock available is likely to continue bearing down on rental growth in the coming months.
Commenting, Johnny Morris, Research Director at Countrywide, said:
“Rents are growing in most of the country but falls in London and the South East are dragging down the national growth rate. Recent falls in London and the South East are small in the context growth in recent years. Rents are a third higher in London and the South East than in 2007.
“Early signs point towards 2017 being a rare year where rents rise faster in the north of the country than in the south. While rents are likely to track any increase in earnings, affordability in London and the South East remains stretched. That is likely to limit rental growth.”