Price For Renting Falls In Real terms in 2017

As we move into the fresh pastures of 2018, looking back over 2017 is a natural habit. For those with an interest in property and lettings, 2017 is undoubtedly a year that has seen a change in fortunes.

The cost of renting a home was once astronomical and seemed to be following an upward curve. News has emerged, however, that the relentless climb is beginning to slow. 2017 was the year when average rental prices fell– for the first time in nearly six years.

The average cost of renting a home dropped to £921 in February, shocking spectators who had expected the usual rise to be announced. Admittedly, this trend proved to be short-lived, as prices had risen by 3.5% by October– but it’s clear the rental market can no longer be considered an upward trajectory in terms of price.

The regional aspect

By the end of the year, many figures had rebounded from their surprising dip in February. However, when taken on a regional basis, the picture is not quite as rosy as it may first appear. Three regions will finish the year with a minus in their average rent percentage, indicating prices are now lower when compared to this time last year.

The three regions who are suffering from a contraction in rental price are East Anglia, the North West, and Northern Ireland– all areas that are regularly mentioned as being in need of regeneration and funding. Another oft-mentioned area is Wales, but they just manage to scrape into the positive percentages with a 1.8% rise to finish the year.

As one might expect, affordable renting in London remains nigh-on impossible. Residents of the capital were further squeezed in 2017, even taking into account the drop that was recorded in February. Renting in London is now 108% more expensive than renting in other parts of the UK, and the price discrepancies are stark. The average rent in London is £1,560; in the North East, the most affordable part of the UK, the average rent is just £536. This is a truly staggering number, and suggests that the London rental market remains buoyant even as other regions struggle.

Looking to 2018

So 2017 saw a year of mixed fortunes in terms of rental prices. The first drop in average rent was a huge surprise, but it is perhaps worth putting into perspective. The drop that caused so much concern was not a huge one; the figure in question was a mere £5 reduction in the average rental cost.

However, it does look as if 2018 will be tough for buy-to-let landlords. Various government initiatives, including Stamp Duty rises, have made buying with the purpose of renting a more expensive pursuit. It is natural to conclude that this may eventually push rent prices even higher as the rental stock is depleted by a lack of interest from investors.

One thing is for sure though: considering the various factors at play, 2018 could be a very interesting year for the rental sector of the economy.

Rental Price Growth On The Decline As Chisrmas Approaches

Rental Price Growth On The Decline As Christmas Approaches

The latest Your Move buy-to-let index confirms that average rents in England and Wales hit £845 during October this year, up 2.2% year-on-year, and down 4.8% compared to October 2016. The East of England seems to have the best deal at the moment with rents rising 6% since the same time last year, and the average price now stands at £887 per month in that region. However, parts of the UK like London and the South East are becoming less and less attractive to both tenants and landlords as we approach the Christmas period. This article will offer some facts and figures that should assist in setting the record straight.

Some other parts of the UK also posted encouraging price increases including:

  • The North West – rents grew to £633 per month – an increase of 3.1%
  • The East Midlands – rents rose to £648 per month – an increase of 3.2%

The capital London didn’t fare as well as some of those areas and had encountered year-on-year price decreases alongside the South East. Experts claim the market continues to move away from those locations as fewer UK residents can afford to rent properties in those upmarket postcodes.

The North East also saw a decline in rental prices with average homes now on the market for £535 per month in October. However, the region is still the cheapest place in the UK for rental properties. Average prices in London now stand at £1,276 per month which is more than twice the price of homes in the North East. Still, both London and the North East saw prices drop by 1% since the same time last year.

Buy-to-let investors saw their portfolios stabilise in most instances between September and October, and average yields in England and Wales remain at 4.4% according to the published Your Move findings. However, compare those figures to the ones obtained a year ago, and homes in every single UK region generate a weaker return than they did back then. During October in 2016, average yields stood at 4.8%.

So, where do buy-to-let investors get the best deal at the moment? Well, those based in the North East of England benefit from the highest returns at the moment with yields of around 5.1% on their investments. Most property tycoons will shy away from London for the foreseeable as returns stand at only 3.2% for October this year. That means it’s possible for investors to make a much better profit elsewhere.

Landlords, investors, and tenants are more than aware of the struggle with rising rents in desirable UK locations. With that in mind, the lack of rental price growth in those areas could encourage more people to turn back to the capital if the trend continues for a few more months. However, as average rents are more than three times higher in London when compared to North East and similar regions, it’s understandable that tenants choose to live outside the city and commute.

Will rental price growth start to improve in the new year? Let’s hope so!

Rent outside London falls for first time since 2011

Rent outside London falls for first time since 2011

Incredibly, rent outside of London has fallen for the first time since 2011, and properties in London have even dropped. According to Rightmove, rents in Britain dropped in the final summer months of the year for the very first time in 5 years.

The First Fall Recorded At This Time Of Year

The national asking rents outside of London fell by 0.2% in the 3 months leading up to September, even though this is one of the busiest times for people to begin looking for a new home. Since Rightmove started tracking rents in 2011, it was the first fall recorded at this time of year.

Landlords are slowly turning away from the overpriced London property market, and are instead flooding the South East of England with new rental properties to consider. This has distorted the national picture somewhat, hence the first drop in 5 years.

The massive number of homes to rent pushed down rents in the southeast by around 2.3%. In every other UK region, the average rent became higher, apart from in Greater London and Yorkshire in the Humber. The average rent in the North East rose by 2.6% to £564 per month, which is the biggest quarterly increase.

A Consistently Unappealing Housing Market

With a chronic shortage of new homes, Britain’s housing market looks consistently unappealing. The young people of Britain are spending 3 times as much as their grandparents did on housing, and according to reports, all for worse quality accommodation.

The number of households privately renting in the UK has increased massively over the years too. In the last 20 years, around 65% of UK households were owners at the end of 2016. 17% were renting from a private landlord and 18% from a social landlord. Less and less people are buying property now, either saying they can’t afford to save up for a deposit or that it’s more of a liability than an investment.

Sam Mitchell, Rightmove’s head of lettings, explains that more landlords are acquiring homes outside of London. This has increased the supply of available property which has in turn pushed down rent. Many agents looking for better yields are now shifting their focus from London. Soon, there could even be a shortage of places to rent in the capital.

Prices have not fallen as much in areas that boast good commuter links, as the demand remains high here. For landlords who are seeking good investments outside of the capital, the most popular areas include; Berkshire, Buckinghamshire, and Surrey.

Average Rent Across The Country

Asking rents in London fell 3.3% in September, with an average of £1,920 per month. The average asking rent across the country is a mere £789 in comparison, so this is still a pretty gargantuan amount that few can afford.

However, it has been predicted that the asking prices of rent in London will rise again soon. This is due to the supply of available accommodation decreasing in the area due to landlords going elsewhere to make money.