The pace of UK rental growth has slowed to its lowest level since 2013 as the government begins to shift its stance away from homeownership.
Rents rose by 1.12 per cent between January and November 2016 – less than half the 2.34 per cent increase seen over the same period in 2015, according to the latest report from buy-to-let lender Landbay.
The average monthly rent across the UK is now £1,188, up from £1,177 at the turn of the year and equivalent to an extra £11 per calendar month, or £132 per year.
London, meanwhile, witnessed a decline of 0.53 per cent over the course of the year, bringing the average rent paid by a tenant in the capital to £1,882 - the lowest since September 2015.
The most significant falls took place in Kensington and Chelsea (minus 3.5 per cent) and Westminster (minus 2.23 per cent), while growing demand in outer London boroughs boosted rents in Barking and Dagenham, Havering and Redbridge by 2.88 per cent, 2.64 per cent and 2.08 per cent respectively.
The report also provides evidence of a link between infrastructure projects and rental values, with rents in areas along the HS2 high-speed rail route experiencing a significant bounce since it was confirmed in 2012.
Birmingham Curzon Street (23.7 per cent) and Birmingham (22.4 per cent) saw substantial uplifts, while growth in Leeds (15.3 per cent), Sheffield (15 per cent) and Manchester (14.5 per cent) also outstripped the rest of the UK (8.8 per cent).
In London, areas along the Crossrail 2 route have seen a similar uplift in values, with hikes of 14 per cent in Shepperton, 11.8 per cent in New Southgate and 25.3 per cent in Broxbourne.
According to John Goodall, chief executive and co-founder of Landbay, the availability of rental accommodation was given a temporary boost by a rush to complete transactions ahead of the increase to the stamp duty levy in April 2016.
He said: “The recent housing white paper demonstrated a significant shift for a Conservative government away from a long-held policy stance in support of home-ownership.
“Finally, we are seeing some long overdue recognition of the role the private rented sector can play in the UK housing mix.
"Even so, schemes large enough to have a serious impact on the ‘broken’ housing market will take time to build. So, this is not a problem that is going to disappear quickly.”
Melinda Bush, director at Dartford-based Quartz Financial Services, said: “I would say the data shows most landlords are conscientious regarding tenants’ ability to cope with steady increases.
"Most of my landlords want to make sure properties are affordable for tenants. Landlords get a lot of bad press, but there are good and bad players in any industry.
“People are now going for cheaper properties up north rather than the south-east. They are looking north of the Midlands because prices are far more competitive, there are quite good rental markets in university towns and the stress tests work out a lot better.”
simon.allin@ft.com
