January rental price increases slow

Rental prices in the UK have continued to rise in the first month of the new year, but data suggests that the severe slowing of rises compared to months before could mean prices falling for tenants in the months ahead.

According to data from the HomeLet Rental Index, the average price of renting a property rose by just 0.7 per cent in January when compared to the same month a year before. This is a marked drop from the year-on-year increase of 1.7 per cent that was experienced in December last year.

The average rent for a new tenancy in January of this year nationwide was £888 per calendar month, up slightly from the £882 per calendar month that was recorded at the same time last year.

It means that the rate of rental price rise is falling, and it has done for the past seven months, with the inflation of rental costs having fallen markedly since the yearly peak seen in June 2016, when they rose by as much as 4.7 per cent.

HomeLet said that if rental prices continue to trend in this direction, then at some time in the next few months, agents and landlords may indeed see prices paid by tenants falling rather than rising as they have been.

Indeed, this is something that has been experienced in certain areas already, with as many as six out of the 12 UK regions actually witnessing a fall in prices between January 2016 and the same month this year.

Martin Totty, HomeLet’s chief executive officer, said: “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. 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.”

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