Rents in the UK rose by an average of 2.1% during September, new data from HomeLet reveals. This continues the trend towards higher rents seen in recent months, following a period in which rental price inflation was very low or even negative. The average rent agreed on a new tenancy signed last month was £927 according to the September HomeLet Rental Index, compared to £908 in the same month of last year.
What About London Rents?
Rents also rose in London, for the second month running after a four-month period in which annual rental price inflation had slipped into the red. Rents in the capital were 1.9% higher last month than in September 2016, with the average tenancy agreed in London last month costing £1,593.
“These figures indicate that rents are on the rise,” says Jason Dyer of JTM Homes. “Whilst the London property market remains hesitant, landlords are facing increased costs and want to seek a return on their investment. With all the relatively recent changes affecting landlords, it isn’t surprising to see that rental levels are increasing.”
What’s Driving Rental Increases?
The changes affecting landlords include:
- Higher regulation costs
- Greater taxation implications
- Changes in buy-to-let mortgages
They are also aware of the threat of imminent interest rate increases, plus the government’s intention to ban letting agents from charging up-front fees to tenants. With these tough and uncertain conditions in place, it’s no surprise that rents are rising.
Martin Totty, HomeLet’s Chief Executive Officer explains: “In a sector where demand for rental properties generally outstrips supply, most informed commentators suggest higher externally imposed costs on landlords will inevitably translate into higher rents to tenants. This may prove to be the start of that upward movement, especially if tenants are left competing for fewer rental properties because some landlords decide the returns from property investment are being eroded by factors beyond their control.”
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