London Rent Price Growth Slowing

Rent price growth for new tenancies in Greater London is at its slowest rate for almost two years, according to figures from the latest HomeLet Rental Index.

The January data shows that rent prices in Greater London were 6.2% higher in the three months to January 2016 compared with the three months to January 2015. This is the slowest pace recorded in Greater London since March 2014.

Comparatively, rents in other regions continue to increase steadily, with the South East and East Midlands experiencing the greatest rent prise rises in the three months to January, at 7.2% and 6.8% respectively.

London Rent Price Growth Slowing

In Greater London, the average rent price for a new tenancy in the three months to January was £1,510 per month. Meanwhile, the average for the rest of the UK, excluding Greater London, was £740 a month.

Although the data shows that the rate of growth in Greater London has slowed, monthly rents on new tenancies are still more than double the average for the rest of the country.

HomeLet’s Rental Index found that 11 out of 12 UK regions saw rent price growth in the three months to January 2016 compared to the same period last year. Just the North West experienced a decrease, of 3.4%, from £646 per month to £624.

On a monthly basis, rent prices have only increased slightly on the previous month. Across the UK, excluding Greater London, rents are 0.2% higher in January compared to December.

In Greater London, rents have dropped by 0.9% over the month. Overall, six out of 12 regions have recorded rent increases in January compared to December. Prices fell in the other six areas.

The CEO of Barbon Insurance Group, Martin Totty, comments on the figures: “It’s notable that there has been a further fall in the rate at which average rents in the Greater London area are rising. In recent years, the capital has seen much faster rates of increase than the rest of the country, but it may be that an affordability ceiling has now been reached in London and that rents will now track other parts of the UK more closely.

“The fact that UK-wide average rents in the private rented sector continue to show sustained upwards growth reflects there is still strong demand for rental properties, driven mainly by the impact of the long-term structural imbalance in supply and demand of property. Landlords achieving higher average rents over time also suggests that tenants starting a new tenancy are proving they can afford higher average rents – with demand outstripping supply, some would-be tenants may be able to outbid rivals for properties, which could drive higher rents.”¹

Have you put your rent prices up yet this year?

^{1 http://homelet.co.uk/news/article/lowest-growth-rate-in-london-rents-for-two-years}