Rental growth stalls as letting market dragged down by London
13th March 2017
Falling rents in London and the South East are dragging down the UK's rental growth, according to estate agency Countrywide. Across the country the average rent was £921 per month in February, 0.6pc lower than a year before, the first fall since November 2010.The average rent in London fell by 4.7pc, and in the South East it slumped 2.6pc. This was partly caused by a 9pc boost to the number of properties on the market across the country, with 18pc more homes on the market in the capital compared to last year. However, Countrywide warned that this would not last.
London and the South East both had more properties, and also fewer tenants looking for homes. Every other region of the UK saw a rise in rent, but at a slower pace than in previous months.Johnny Morris, research director at Countrywide, said: “ Recent falls in London and the South East are small in the context growth in recent years. Rents are a third higher in London and the South East than in 2007.“Early signs point towards 2017 being a rare year where rents rise faster in the north of the country than in the south. While rents are likely to track any increase in earnings, affordability in London and the South East remains stretched. That is likely to limit rental growth.”It comes as an online petition passed the 100,000 signatures threshold, calling for the Government to make mortgage lenders to accept that paying rent as proof of being able to make mortgage repayments. It has been signed by more than 140,000 people, which means it can be debated in Parliament. The Government has yet to respond to it.The issue is an acute one, as by 2025 there will be an estimated 7.2m households in the UK which are privately rented, up from 5.4m in 2015. Last week, the Royal Institution of Chartered Surveyors said that despite the current falls in rents, they are predicted to rise by more than 20pc in the next five years, pushing homeless people and those on housing benefits out of the private rented sector.Pete Ball, head of personal finance at specialist lender Together, said: "As this petition clearly demonstrates, there is a need to compile more detailed data on the credit profile of these individuals, which will then help lenders to assess their applications when they look to obtain a mortgage. "If there is a debate following the petition and it leads to new and improved measures in this space, that will be a positive step for both lenders and these aspiring homeowners.”