Rents across the UK continued to rise during June but the first half of 2016 has seen the the pace of rental increases slow, the HomeLet Rental Index has shown.
The index, the most comprehensive data available on the UK’s private rental market, shows that rents agreed on new tenancies across the UK (excluding London) over the three months to the end of June were up by 3.5%, compared to the same period in 2015. In the capital, meanwhile, rents were 3.9% higher.
By contrast, the UK-wide figure for May was 4.4% (6.2% in London). The more modest rental increases seen in June are a continuation of a trend that has developed throughout the first half of the year, with rents rising across much of the UK each month, but at a slower pace than was the case throughout most of 2015; last June, rents were rising at an annual rate of 7.8% (10.1% in London).
Martin Totty, chief executive officer of Barbon Insurance Group, which owns HomeLet, said: “The June HomeLet Rental Index shows that the rental market remains resilient in the face of the various economic and political headwinds the sector has faced recently. Landlords are continuing to secure rental growth whilst there are some early signs of affordability criteria beginning to bear on the rates of rental price growth”
“The impact of the EU referendum vote will now play out over the months ahead: if, as expected, the result acts as a restraint on the supply of new housing, the gap between demand and supply in the private rental sector will remain marked; all the more so if more people decide to rent while waiting to see what happens to house prices.
“Landlords will be considering their position carefully, particularly in the light of further taxation changes to come next year, which could reduce net yields; with long-term drivers such as net population growth still in place, it is likely that rents will continue to rise, though affordability will continue to be crucial. The recent slowdown in rental growth rates may suggest an affordability ceiling is being approached.”