Private rental prices rise by 1.3%
Private rental prices rose by 1.3% in the 12 months to May 2019, up from 1.2% in April, ONS’s Index of Private Housing Rental Prices has found.
Private rental prices in Wales grew by 1.1% in the 12 months to May 2019, unchanged since February 2019. Rental growth in Scotland increased by 0.8% in the 12 months to May 2019, up from 0.7% in April 2019.
And in England, private rental prices grew by 1.3% in the 12 months to May 2019, up from 1.2% in April.
Kate Davies, executive director of Intermediary Mortgage Lenders Association (IMLA) said: “After filing their 2017-18 tax returns, landlords are becoming more aware that ongoing changes to mortgage interest tax relief are increasing the financial challenges facing them.
“This is leading more property investors to reconsider their options and the pressure on some to increase rental prices will be mounting.
“We do not see it as a coincidence that several rental indices show that, following a protracted period of softness, average rents in London are once again increasing.”
Growth in private rental prices paid by tenants in the UK has generally slowed since the beginning of 2016, driven mainly by a slowdown in London over the same period. Rental growth has started to pick up since the end of 2018, driven by strengthening growth in London.
Rental prices for the UK excluding London increased by 1.5% in the 12 months to May, unchanged since January.
The weaker growth in Scotland since 2016 may be due to stronger supply and weaker demand in Scotland, as reported by the Association of Residential Letting Agents (ARLA).
The annual rate of change for Northern Ireland (2.1%) in March 2019 was higher than the other countries of the UK.
Northern Ireland’s annual growth rate has remained broadly consistent at around 2% since 2018.
London private rental prices increased by 0.9% in the 12 months to May, up from 0.5% in the 12 months to April, its highest annual growth since September 2017.
The Royal Institution of Chartered Surveyors (RICS) reported in their September 2018 Residential Market Survey that tenant demand has staged a sustained recovery in London, increasingly outstripping supply. These effects may be now starting to feed through to the Index of Private Housing Rental Prices.
Focusing on the English regions, the largest annual rental price increase was in the East Midlands (2.1%), unchanged from April.
This was followed by the South West (2.0%), up from 1.7% in April 2019 and Yorkshire and The Humber (1.8%), unchanged since February 2019.
The lowest annual rental price growth was in the North East, where prices increased by 0.5%, up from 0.4% in April 2019.
Davies said hopefully the new Prime Minister would back landlords as increased pressure on them means they have to raise rents, making it harder to tenants to save for a deposit.
She added: “Despite the current political and economic uncertainty, we hope a change in leadership will be seen as a opportunity for the government to demonstrate its support for landlords, which goes hand-in-hand with helping people get on the property ladder.
“Growing pressure on landlords to increase rents in order to make ends meet will ultimately have a detrimental effect on renters’ ability to save for deposits to buy their own homes.
“The government should be careful to ensure that any future regulation around the private rental market does not further shrink the appetite of private landlords to satisfy the growing demand of tenants. IMLA will continue to closely monitor the impact of the tax and regulation changes.”