Rents in the UK, excluding London, rose by 1.18% in the 12 months to July 2018, the slowest annual rental increase in five years, according to the latest Landbay Rental Index, powered by MIAC.
Despite rental growth across the UK being in positive territory there is a synchronised slowdown taking place. In England, excluding London, the level of growth remained at 1.18% - its lowest point since April 2013. With the capital included the pace of growth slows to 0.81%. Despite this, the last two months have seen the capital return to positive territory, with the first annual rental increase in 18 months happening in June.
Rental growth in Scotland has hit a record low at 0.98% year-on-year. A similar picture can be seen in Wales, where rental growth reached its lowest level since June 2015. However, with rental growth at 1.60% this remains higher than the Welsh average growth rate of 1.49%.
In face of the slowdown, there remains hot spots throughout the UK for rental growth. Landbay has mapped the top 10 best and worst performing local authorities for rental growth on an annual basis.
Monmouthshire in Wales leads the pack with rental growth at 3.22%, followed by Nottingham (2.87%) and Conwy (2.71%) in third. Four of the ten best performing areas are in Wales, while Scotland and England both have three apiece.
Aberdeen City and Aberdeenshire top the two worst performing spots – both areas were heavily hit as the local economy was impacted by the drop-in oil price in 2014, but the area is showing signs of a recovery. England has seven of the worst performing areas.
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.
“With an interest rate rise on the horizon, many landlords that are stuck on variable rates or those looking to refinance will likely feel the impact. Therefore, tenants could be hit by rent rises in the near future as landlords look to recover some of the cost. Brokers can help their clients navigate the impact of an interest rate rise and make sure they have the best deal for their circumstances.
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