Rents in the UK, excluding London, rose by 1.18% in the 12 months to July 2018, the slowest annual rental increase in five years, the latest Landbay Rental Index powered by MIAC has found.
Despite rental growth across the UK being in positive territory there is a synchronised slowdown taking place. In England, excluding London, the level of growth remained at 1.18% – its lowest point since April 2013.
John Goodall, chief executive and co-founder of Landbay said: “Rental growth across the UK is stuttering.
“However, there are signs of a recovering market in London and stronger demand for rental properties.
“On the face of it, landlords have had a tough time in the past two years from increased regulatory pressure to a significant increase in stamp duty costs, yet they have managed to shoulder many of these costs without passing them onto tenants.”
With the capital included the pace of growth slows to 0.81%. Despite this, the last two months have seen the capital return to positive territory, with the first annual rental increase in 18 months happening in June.
Rental growth in Scotland has hit a record low at 0.98% year-on-year and similarly in Wales rental growth reached its lowest level since June 2015. However, with rental growth at 1.60% this remains higher than the Welsh average growth rate of 1.49%.
In face of the slowdown, there remains hotspots throughout the UK for rental growth..
Monmouthshire in Wales had the highest performing rental growth at 3.22%, followed by Nottingham (2.87%) and Conwy (2.71%) in third. Four of the 10 best performing areas are in Wales, while Scotland and England both have three apiece.
Aberdeen City and Aberdeenshire top the two worst performing spots – both areas were heavily hit as the local economy was impacted by the drop-in oil price in 2014, but the area is showing signs of a recovery. England has seven of the worst performing areas.
Goodall added: “With an interest rate rise on the horizon, many landlords that are stuck on variable rates or those looking to refinance will likely feel the impact.
“Therefore, tenants could be hit by rent rises in the near future as landlords look to recover some of the cost. Brokers can help their clients navigate the impact of an interest rate rise and make sure they have the best deal for their circumstances.”