New figures from the HomeLet Rental Index suggest that the rental market has remained steady in the face of economic, political and legislative changes.
The Index has recently been redesigned in order to include additional data on new tenancies, alongside property type and location. Results show that rents agreed on new tenancy agreements increased in most areas during the three months to August, albeit at a moderate rate.
New tenancy costs
According to the data, the average price of a new tenancy in the private rental sector rose by 3.1% in the period to hit £913pcm. This was a rise from the £885pcm recorded in August 2015.
August 2016’s HomeLetRental Index shows that rents have risen in eleven out of twelve regions of the UK year-on-year. The North East was the only region to see a fall in annual rents, with prices down by 1.6%.
While rents continue to rise, they do so at a more contained pace. The 3.1% increase seen during August is comparable to rises of between 3.5% and 3.8% seen over the previous four months. The largest slowdown was evident in London and the South East.
Results by region can be seen below:
||Average rent in August 2016
||Average rent in July 2016
||Average rent in August 2015
|East of England
|Yorkshire & Humberside
||Based on new tenancies in August 2016
||Based on new tenancies in July 2016
||Based on new tenancies in August 2015
||Comparison of average rent in August 2016 and July 2016
||Comparison of average rent in August 2016 and August 201
Rental rises continue through August
Finding a balance
Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company, observed: ‘The latest Index reflects a market in which landlords are engaged in a delicate balancing act: they’re aware of tenants’ concerns about affordability while also conscious of the need to achieve target yields. August’s figures suggest that rents are continuing to rise at a sustainable pace-ahead of price inflation, but well below house price increases, which were running at close to 6% according to the most recent data.’
‘In the medium to longer term, the fundamental driver of rents will be the balance between demand and supply for rented property. We expect demand in the private rental sector to continue to grow, in line with demographic changes such as population growth and as affordability concerns remain in the house purchase market, so it is important that we see efforts to support supply,’ he added.