The South West of England and Scotland saw rents increase faster than anywhere else in the UK over the three months to July 2015, according to the latest index.
The average rent in the UK for new tenancies over the three months to July 2015 was £977 per month or £761 excluding Greater London, the data from the HomeLet index shows.
Indeed, the average rent on a new tenancy in London now stands at £1,538 per month, 9.5% higher than a year ago and overall rent price increases are running ahead of inflation and house price growth.
The index, which claims to provide the most up to date figures on UK rent prices, shows that rent price growth in the private rental sector is now extremely broad based with average rental values up in every region of the UK except the North West and are 11.8% higher when compared to the same period in 2014.
Three regions of the UK have seen rent prices rise at a rate exceeding that of London in the three months to July 2015. In the South West of England rent prices on new tenancy agreements signed in the three months to July were 11.4% higher than in the same period of last year, in Scotland they increased 11.2% and in the South East of England there was growth of 10.3%.
In London where, in cash terms, the average rent on new tenancies is more than twice as high as in the rest of the country, prices continue to rise. New tenancies signed over the three months to July came with rents that were 9.5% higher than in the same period of last year.
‘The index demonstrates just how broad based the rise in rent prices has now become, confirming that this is a UK wide trend. Regions which have long been associated with a buoyant rentals sector, such as London, continue to experience rising prices, but rents are also rising in many other parts of the country at similar rates,’ said Martin Totty, chief executive officer of Barbon Insurance Group, parent company of HomeLet.
‘The South West of England, for example, is benefitting from its popularity with those attracted to the area for lifestyle reasons, as well as the strong local economy in many of the towns and cities of the region,’ he pointed out.
He explained that over the past few years, price trends in the rental market and house purchase market have been very similar. ‘However, across the first half of this year, house price growth has slowed whilst rental values have continued to increase, perhaps reflecting a change in the relative attractiveness of renting versus buying over this recent period,’ he said.
With early signs of the cost of mortgage finance starting to edge up, it will be interesting to see if this recent trend continues or if the change in buy to let mortgage interest tax relief announced in the Summer Budget has any indirect impact on rental values with some suggesting it could further stimulate rental values over time if supply of rental listings is constrained as a consequence,’ he concluded.
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Source: Property News Spain