Rent on Freshly Rented Homes Decreases for First Time in Five Years After Persistent Increase
Rent Declines for the First Time in Five Years Across UK, According to Hamptons Report
In a surprising turn of events, the UK rental market has experienced a pause, with rents on newly-let homes falling for the first time in around five years, according to a report by leading real estate agency Hamptons.
The report, which uses data from the Connells Group to track changes to the cost of renting, suggests that falling mortgage rates and a cooling economy are easing pressure on the rental market. The Hamptons lettings index, which is based on rents achieved rather than advertised rents, shows that the average rent on a newly-let property in Britain decreased by 0.2% year-on-year in July 2022.
While rents on renewals continue to climb, the gap between the average rent on renewals and new tenants is the smallest in four years. The average rent on a renewal in Britain is £1,290 per month, which is higher than the average in August 2020 by around a third (34%). However, this growth has slowed significantly compared to last year when rents were rising at a double-digit pace in regions like the North East (10.6%), Yorkshire and the Humber (6.7%), and the North West (8.6%).
London, in particular, has seen a significant drop. July marked the seventh monthly decline in a row for the capital, with rents falling by three percent annually. This is London's biggest annual drop since May 2021. The North of England has seen the sharpest slowdown over the past year in rent increases. The Hamptons lettings index also reported that rents in the North East and Yorkshire and the Humber also experienced falls in July. Wales saw rents decline on an annual basis for the third month in a row.
However, despite the overall fall, rents are still rising in some parts of Britain. The Midlands and South West of England are leading the way for rent increases, with the average rent in these regions showing steady growth.
Aneisha Beveridge, the Head of Research at Hamptons, provided expert analysis and commentary on housing market trends, migration patterns, and property tax reforms. She stated that landlords are keen to keep pace with inflation and close the gap with market rates. Landlords are also keeping renewal rents closer to market levels and more closely mirroring broader inflation.
In conclusion, while the rental market in the UK is showing signs of slowing, it is important to note that rents are still increasing in some regions. The report suggests that the pause in the rental market could be a temporary response to economic factors, and the market may continue to evolve in the coming months.
