The average monthly rent for newly let properties has fallen for the first time since late 2010 according to the estate agency Countrywide.
The fall in rents is believed to be caused by a large recent increase in the supply of properties becoming available. This was possibly attributable to some landlords rushing to buy last year before a 3% stamp duty surcharge came into effect.
In contrast to the usual pattern of rent rises in London and declines in the rest of the country, nationwide rents have continued to rise. Rents fell by nearly 5% in the past year in the capital to an average of £1,246 a month. In South East England they fell by nearly 3% to £1,152. The average cost of a new tenancy in England, Wales and Scotland is £921 a month, down by 0.6% in the year to February.
According to Countrywide’s research director Johnny Morris, “Rents are growing in most of the country but falls in London and the south east are dragging down the national growth rate. Early signs point towards 2017 being a rare year where rents rise faster in the north of the country than in the south.”
Morris also added that brexit and economic uncertainty also appears to be weighing on London house prices. “Economic and housing sentiment – both in sales and rental markets – has been affected by our vote to leave the EU, in London more than anywhere else. This uncertainty causes tenants to be more cautious, meaning less likely to move and more likely to look for cheaper accommodation, eg sharing. With the private rented sector home to around three-quarters of new migrants, any future substantial shift in migration patterns would likely have a knock-on effect on rents.” Morris said.
Countrywide’s data does conflict however with the most recent figures from the Office for National Statistics (ONS).
Its latest figures for the year to January 2017, the ONS showed that across the UK rents for private tenants had risen by 2.2.%.
When the figures were published last month, the ONS commented that “inflation in the rental market is likely to have been caused by demand in the market outpacing supply.”
Countrywide said it expected the apparent over-supply of rental properties to be flushed out of the market in the coming year. Average national rents are then expected to start to grow again after that.