Rents rise in July
Average UK rents continued to rise during July, hitting £779 a month, and building on the consistent increases seen during the first half of the year, according to the HomeLet Rental Index.
The index revealed that rents agreed on new tenancies across the UK (excluding London) over the three months to the end of July were up by 2.3%, compared to the same period in 2015. In the capital, meanwhile, rents were 4% higher.
The data suggests that landlords have been able to continue securing higher rents on new tenancies despite the economic uncertainties created by the UK’s vote to leave the European Union in June.
It mirrors data from the housing market, with mortgage lenders also reporting modest growth in house prices in the month following the Brexit vote, although it is still early days.
Looking ahead, Homelet said that the fundamental forces in the private rental sector remain unchanged: Britain’s growing population, the relative unaffordability of house prices, and the lack of new homes being built combined with the reduction in social housing suggest that the private rental sector will continue to be an ever-important source of homes in the years and decades to come.
Martin Totty, CEO Barbon Insurance Group’s chief executive officer, said: “Ultimately, rents will be determined by supply and demand in the private rental sector; what we know here is that population growth will continue to increase demand, and that the housing stock isn’t growing quickly enough to meet that demand.
“However, with rents ultimately limited to a tenant’s ability to pay, rents are likely to continue to climb, albeit at the slowing pace noted most recently.”