August 2017 - Bottleneck of housing supply sees rents rise in July
Shrinking housing stock forces rents upwards
Every region barring the South West saw rents increase in the year to July, Your Move found.
The strongest performance came in Wales where prices have grown by 4.3% in the last 12 months to hit an average of £595.
Three other areas saw growth of more than 3% in the last year. In the South East prices increased by 3.6% to reach an average of £884 while in the East of England the typical rent is now £873 per month after 3.3% growth. Finally, the North West saw price increases of 3.1% in the past 12 months to reach an average rent of £630.
By contrast, rents in the South West were down 2.2% in the year to July 2017. The average property in this region now lets for £667 per calendar month. This was the only area to experience a decrease.
The increases in most areas can be associated with a fall in the housing stock available to renters. This can be attributed to the recent tax changes affecting landlords and the Stamp Duty charges on second homes.
Rent rises could be down to the introduction of a range of government policies directed at the lettings market. The effects of these policies, such as the 3% stamp duty levy and removal of mortgage relief for landlords, have restricted the supply of new lettings properties coming to market. However, this seems to have been countered by a drop in tenant demand post Brexit. The recent release of migration figures seem to corroborate with this. Now that the initial post Brexit exit of EU citizens is behind us and with tenant numbers starting to rise again, it’s possible that more rent rises could come in the near future.
In London, prices have grown 1.2% in the last 12 months to reach an average of £1,283. However, this headline figure masks big differences depending on the location of the property.
The average property in Travelcard Zone 2 cost tenants £1,831 a month compared to a typical price of £1,161 in Zone 4. Yet high travel costs mean the price benefit of living in the outskirts of London has been reduced.
High inflation means the average train ticket is set to increase by 3.6% in January 2018, meaning more people could be tempted to cut the cost of travel and move closer to their work - even if the rental price is higher.