There are rising fears over the state of the housing market amid reports of falling house prices and a struggling rental market. The latest figures from HomeLet showed rent inflation had slowed to its lowest point since February 2010.
In April, London saw rent prices fall by 1.2 per cent, compared to the same period last year; it seems the capital might finally be coming to the end of its property cycle boom. The drop is the first since 2009 and comes as a relief to prospective tenants after years of disproportionate growth.
Dan Wilson Claw, director of Generation Rent, said the shifting market may be good for current tenants too:
“Falling rents is definitely positive news for those looking to move, or to renegotiate their rents with their landlord. Lots of residential property built over the past few years is now coming on to the market and that increase in supply is rippling through the market.”
Indeed, the data provided by HomeLet showed London rents dropping to an average price of £1,519. This was mirrored by a wider decline of 0.4 per cent in the South East, which together has pushed rental price inflation down across the country.
However, it’s not all good news for tenants. Scotland, North-East England and Wales witnessed the highest levels of rental price inflation across the UK.
Those looking to rent in Wales saw an increase of 2.3 per cent in what they can expect to pay compared to April last year. Similarly, in Scotland tenants were faced with a rent rise of 2.2 per cent, while in the North-East the average rent in April hit £525 – also a 2.2 per cent increase on last year.
But despite these regional rises, it looks like relief is on the horizon for some of the most expensive areas in the UK.
Rental prices in certain parts of the country have led to many being priced out of central urban areas. In fact, research last year revealed that Londoners were forced to spend a startling 62 per cent of pre-tax income on rent and there is speculation about the cost of living continuing to rise.
Now, though, it seems the balance is finally shifting away from a landlord’s market and putting tenants in a stronger position. It’s likely this shift has been partly driven by Brexit uncertainty, but changing regulations have also had an impact.
New rules, implemented in April 2017, means buy-to-let landlords can no longer deduct their mortgage interest costs from their taxable income, making buy-to-let a less favourable investment for some. As a result, the market has seen reduced appetite for buy-to-let purchases and an increase in landlords selling off their properties. Consequently, tenants and buyers now have more options – a shift which market commentators are noticing.
Martin Totty, Chief Executive Officer of HomeLet, said:
“Rents have been rising at a much more modest pace across the whole of the UK in recent months, with lower levels of rental price inflation and even falling rents seen in areas of the country where prices were previously rising most quickly. This trend is ongoing: we continue to see landlords’ and letting agents weighing tenant affordability considerations very seriously.”