Average asking rents in England and Wales increased by 0.7%, excluding London, year in year in the fourth quarter of 2017, the lowest annual rise since 2014, new figures show.
However, in London asking rents ended the year some 1.2% higher than at the end of 2016, the first time the annual rate in the capital has been in positive territory in nearly two years.
The data from Rightmove’s rental trend tracker report also shows that the South East and Yorkshire and the Humber are the only two regions to end 2017 with asking rents down, while the North East saw rents rising at the highest rate, up 3.3%.
Farnham in Surrey recorded the highest rental growth outside London at 9% in 2017, followed by Corby in Northamptonshire, up 8.2%
The national average rise of 0.7% was well below previous years with rises of 3.7% recorded in 2015 and 3% in 2016. Even London has performed poorly from an 8% annual rise in asking rents in 2014.
The report suggests that rents have been affected by the surge in rental supply in 2016 from landlords who had rushed to buy up properties to rent out before the additional stamp duty on second homes was introduced. As supply has tightened rents have started to increase again.
Rightmove director and housing market analyst Miles Shipside pointed out that nationally rents have been holding pretty steady over 2017, retaining the 3% plus rises seen in both 2015 and 2016, and adding a more modest 0.7% in the last 12 months.
‘Increasingly stretched tenant affordability, and the surge of buy to let property supply beating the stamp duty tax hike deadline, have acted together to mute landlord pricing power. In contrast, after a few years of falling rents in London they’re back on the up again, due to a combination of tightening stock available to rent and strong demand,’ he said.
He also pointed out that while the 2017/2018 tax year will see the start of the Government’s changes to tax relief on buy to let mortgages, he does not think this first phase will have that much of an effect on many landlords’ portfolio decisions until another year down the line.
‘From speaking to some landlords they’re unlikely to make any decisions to sell up until they see in real time how much of an impact it has on their finances, with many choosing to take a wait and see view rather than looking at short-term gains or losses,’ Shipside explained.
‘However, agents report that there are some highly geared landlords with large loans looking to reduce their exposure to loss of tax relief by cashing in and selling some properties,’ he added.