New figures indicate that rental price inflation is running below general inflation, as many landlords are coming to the conclusion that a number of tenants have, or are approaching, an affordability ceiling.
The HomeLet Rental Index shows that the annual rate of rental price growth reached 0.8% in February. This is below the general rate of inflation, which stands at 1.8%, according to statistics.
In addition, the figures show that the average UK rent for a new tenancy starting in February was £895pcm. This was a rise from £888 seen at the same period last year.
Annual rental price growth has slipped from a high point of 4.7% in June 2016. There has been a fall in pace of rental inflation in regions of the country where rents were previously rising most.
HomeLet’s research suggests that more than half of the 3,726 landlords questioned could have no alternative but to raise rents in the face of increasing pressures. These have been caused by upcoming tax changes, though almost a third said they will defer rent rises until 2018.
The table below shows how rents have risen month-on-month and year-on-year in twelve regions surveyed:
||Average rent in February 2017
||Average rent in January 2017
||Average rent in February 2016
|Yorkshire & Humberside
|East of England
Rental price inflation running below general inflation
What’s more, the survey found that landlords appear to be sympathetic to ensuring that rents are affordable for tenants. Pleasingly, 96% of landlords said that they are happy with their existing tenants.
Martin Totty, Chief Executive of Barbon Insurance Group, parent company of HomeLet, said: ‘Our research again demonstrates that the vast majority of landlords have positive working relationships with their tenants.’
‘In recent months, we have seen landlords treading very carefully with rental price rises, amid concerns about tenants’ ability to pay. With more than one in five landlords blaming an increase in their tax liability for raising rents, it remains to be seen if this can sustain. Landlords will hope the Chancellor does not make it harder for them to continue supporting their tenants in this way, with further changes to the tax system or legislation, as he prepares to unveil his Budget on the 8th March,’ he added.