Annual rental growth in the UK (excluding London) is at its lowest point in nearly six years, according to the latest Landbay Rental Index, powered by MIAC.
However, total rental growth across the English regions has been seven times that of London, following the vote to leave the EU in June 2016 (3.69% compared to 0.52%).
London’s property market, which has suffered from Brexit uncertainty, saw annual rental growth drop from 1.26% in June 2016 to a low of -0.31% a year later, before starting a slow recovery up to 0.67% in January 2019.
The North East was the only other region to see cumulative rental growth below 1% since the vote, with rents growing at 0.71%.
In contrast, the East Midlands led the way with growth of 6.28% since June 2016, followed by the West Midlands at 4.75%. Since the vote, the rental growth in England excluding London is 3.69% – down to 2.5% with the capital included.
Rental growth is slowing, though. Excluding London, England has seen the lowest annual rental growth in six years (1.11% in January 2019, 1.07% in January 2013).
In Wales, growth is currently at the lowest it’s been since April 2014 (1.39%), while in Northern Ireland, growth of 0.54% is the slowest since the Rental Index began collecting data in January 2012.
Scotland, however, has seen a steady growth of 1.66% over the last six months, with annual rents reaching £746. This is higher than Northern Ireland (£573), Wales (£656) and creeping up to the English average excluding London (£776).
According to Landbay, Scottish growth is led by high annual growth in Edinburgh City (5.88%), Inverclyde (3.56%), and Glasgow City (2.49%), while Aberdeen City (-6.6%) and Aberdeenshire (-5.42%) are weighing down on even faster national average growth.
“Falling rents in London have masked relatively strong growth in the rest of the UK since the Brexit vote, but we are now firmly in the midst of a nationwide rental growth slowdown,” said John Goodall, chief executive officer and founder of Landbay.
“This may be some relief to renters, but the cost of renting a property remains high. House prices continue to outpace wage growth, dampening the ability of aspiring homeowners to save for a property of their own, meaning demand for rented accommodation remains robust.”
He said that without purpose-built rental properties and first-time buyers having a radical house building plan, there is no way supply will ever be able to catch up with demand.
“The private rental sector is more important than ever and the government will need to take quick action – especially in times of economic and political uncertainty,” he added.
“Rental growth may be slowing, but the pace of change varies wildly between regions. Landlords and brokers alike need to be tuned into these variations in order to maximise their profits, using variations in rental growth and yields over the past year to pick out some of the most promising regions for buy-to-let.”
He concluded: “Consistent rental demand will obviously drive returns in the long-term, but by selecting the right location yields will be even greater.”