Research has revealed that London rents increased by 0.10% in the year to June 2018, the first annual rental rise for the capital in 18 months.
According to Landbay’s latest Rental Index, the average rent paid for a home in London now stands at £1,884, which is still 2.5 times the rest of the UK (£764) in spite of the tough market conditions in the capital in recent years which has driven rents down.
There has been plenty of focus on falling rents in London in recent years, with values dropping in the capital on a year-on-year basis every month since December 2016. In June, however, rental growth in London finally returned to positive territory.
Away from London, though, rental growth continues to slow. It was a similar story for the whole of the first half of 2018, with UK rents increasing by just 0.40% in the six months to June, or 0.54% if you exclude London.
The strongest regions for rental growth so far this year have been the East Midlands and East of England, up by 0.95% and 0.70% respectively.
By contrast, the North East struggled badly with rents declining by -0.08% in the first half of this year.
The fastest rental increases in H1 2018 at a county level were witnessed in Nottingham (1.43%) and Northamptonshire (1.25%), while at a London borough level rents rose in 25 of the 33 boroughs over the last six months. Only Barking and Dagenham (-0.02%), Barnet (-0.29%), Brent (-0.65%), Hammersmith and Fulham (-0.07%), Kensington and Chelsea (-0.34%), Kingston upon Thames (-0.05%), Tower Hamlets (-0.01%) and Waltham Forest (-0.21%) have witnessed a decline in rents since the beginning of 2018.
“While there remains a huge degree of regional variation, the overall trend has been a slowing of rents across the UK in the first half of this year,” John Goodall, chief executive and co-founder of Landbay, said.
“However, much of this has been London weighing down heavily on otherwise resilient growth across the UK. Now that London rents have bounced back to growth this could all be about to change.”
He added: “Wherever they’re based, landlords have had to face a myriad of challenges over the past two years, with regulatory and tax changes reshaping the sector. Despite this, there has been little sign of them passing on additional costs to tenants. However, with a rate rise on the horizon, meaning a rise in the cost of borrowing for landlords, we may well start to see landlords increasing rents in the coming months to stay afloat.”