The £1.8k rental Brexit dividend

It’s hard to ignore the impact that the vote to leave the EU has had on property market in London. While tenants are better off, without necessarily realising it, uncertainty in the market has caused a conundrum for landlords.

Many landlords will have been looking to offset the Government’s punitive tax regime by raising rents, however the uncertainty surrounding Brexit has forced the vast majority to forfeit this to maintain a steady income.

Tenants spend a third of their pay on rent

Rent as a proportion of a monthly salary varies across the UK. In London, despite having higher monthly pay packets, tenants are paying as much as 61% of their gross salary on rent for the average rental property. For a one-bedroom property this drops to 47%. Other regions with tenants with higher than average rent as a proportion of their pay are the South East and East England, which pay 42% and 38% respectively of their gross salary on rent.

Rental growth across the UK showing signs of a sustained recovery

The average rent in UK has risen by 0.13%, the highest monthly increase since April 2016. The increase pushes the average rent paid for a property in the UK up to £1,209 per month, dropping to £767 if London is excluded. Rental growth on an annual basis also showed signs of a sustained recovery, with rents across the UK increasing to 0.97%, the highest level seen since May 2017.

Rental growth across the UK is stuttering. However, there are signs of a recovering market in London and stronger demand for rental properties. On the face of it, landlords have had a tough time in the past two years from increased regulatory pressure to a significant increase in stamp duty costs, yet they have managed to shoulder many of these costs without passing them onto tenants.