Rental growth slows to 0.7%

Annual rental growth has slowed to 0.7% – falling from 4.7% seven months before, HomeLet’s Rental Index for January has found.

In the South East rental growth turned negative by 0.6%, while on a monthly basis rents fell in half of UK regions.

Annual rental growth was highest in Northern Ireland (4.8%), Wales (3.8%) and the North West.(2.2%).

Martin Totty, chief executive of HomeLet, said: “Our data has been showing, for some time, that landlords do not feel able to raise rents on new tenancies at anything like the pace seen during 2015 and the first half of 2016.

“Now it is even possible that rents will begin falling, which would be unprecedented in recent times.

“Landlords and letting agents have clearly recognised concerns about the affordability of rising rents and are now being cautious about what they expect tenants to pay.”

He added: “However, with many landlords facing increasing costs in the months ahead, as the government begins to cut back on mortgage interest tax relief, the sector faces a difficult balancing act.”

“It remains to be seen if landlords feeling the pressure of tougher tax and regulation will be able to recoup these higher costs, as many in the industry had assumed.

“We see no sign of landlords panicking, and there is little prospect of an end to the long-term imbalance between supply and demand for residential property; still, with economic uncertainty adding to the unpredictability of the short-term outlook, landlords and tenants alike will be monitoring the marketplace very closely.”

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