Conflicting news on the direction of travel for private rents is emerging with different bodies reporting either above-inflation increases, or small falls as worries over the impact of Brexit continues to dominate.
Data from the property website Rightmove showed rent levels continuing to rise. They report average asking rents in London hit an all-time high of £2,034 in the fourth quarter of 2018 as the number of available properties dwindled. Compared with a year earlier, the number of properties available to rent is down 22 per cent.
Rightmove is predicting that rents will rise four per cent in London this year and by three per cent outside the capital. Away from London, places in the north-west have had the biggest demand from tenants, with Bootle, Runcorn and Birkenhead all proving popular.
But according to figures from the Deposit Protection Scheme, rents across Britain fell in 2018 for the first time in a decade, offering relief for tenants after years of inflation-busting rises. The DPS is a Government-backed group that supervises tenancy deposits and it showed the average monthly rent fell by £9 (down 1.17 per cent) from £774 in 2017 to £765 last year, while the typical UK tenant spent 31 per cent of their income on rent in 2018, a fall of 0.5 per cent from the year before.
Tax changes impact
The biggest percentage fall was in Yorkshire and the Humber, where the average monthly rent dropped by £21 (3.63 per cent) to £546. London recorded the biggest fall in cash terms, with the typical property rented at £1,294 a month, down £30 from a year ago.
Despite the drop, Londoners spend the biggest proportion of their pay on rent, with the typical tenant losing 41 per cent of their monthly wage. The fall in rents confounds forecasts from landlord groups, which said they would have to rise in 2018 to reflect higher taxes on mortgaged buy-to-let properties.
The sting in the tail for tenants is that while the DPS recorded rent falls nationally over the first nine months of 2018, it began to see a small uptick in the final three months of the year. Landlords said demand from EU nationals had slowed, but insisted rents would have to rise in 2019 to claw back money lost through buy-to-let tax changes and the letting fees ban, which comes into force in June.
RICS has warned that with demand outstripping the supply of rental properties, rents could increase in 2019 by an average of two per cent. To counterbalance this, uncertainties around the impact of Brexit and their impact on house prices, could encourage longer tenancies and fewer rent increases.
By Patrick Mooney, editor