Rental price inflation has now lagged behind general rate of inflation, despite average rents across the UK rising by 0.7% in November compared to the same month a year ago, HomeLet says.
According to HomeLet’s Rental Index, the average rent agreed on a new signed tenancy in November was £904, compared to £898 in the same month last year. This is in spite of rents reducing in real terms for almost the whole of 2017, as stated by the latest figures from the Office for National Statistics (ONS).
With inflation in the UK currently standing at 3.1%, December 2016 marked the last time that average rental price growth exceeded inflation, when the HomeLet Rental Index recorded a 1.7% rise against a consumer price index (CPI) of 1.6%.
However, there are significant regional variations, with quick rises in rent in some parts of the UK. In fact, annual rental price inflation in excess of 3% in Northern Ireland, the East Midlands, the South-West of England and the North-East of England was recorded during November. Meanwhile, Greater London, the East of England and the South-East of England all recorded negative figures.
November also saw rents in London fall 0.2% year-on-year, with the average monthly rent in the capital standing at £1,530, compared to £1,556 in the previous month. This also marks the fifth month this year that the capital has recorded negative rental price inflation.
On a national scale, rental price inflation across the UK would have been 1.1% in last month rather than 0.7%, had London not experienced such a slowdown in rental values.
Additionally, comparing November to October on a monthly basis, average rents fell in 10 out of 12 regions of the UK last month, with only the South-West and the North-East recording positive figures.
Commenting on the research, HomeLet’s chief executive, Martin Totty, said: “So far this year we have seen very modest rental price inflation; rents are now higher than a year ago in most parts of the country, but there has been no return to the more rapid increases we last saw during the first half of 2016.”
He added: “HomeLet’s monthly data continues to support a picture of modest increases in rents over 2017 and, in most instances, a reduction in real terms against the backdrop of underlying higher inflation.”