Considering the various factors at play, 2018 could be a very interesting year for the rental sector of the economy.
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.