Rents in regions fared well since Brexit vote, but slowdown looms
Annual rental growth in the UK without London is at its lowest point (1.16%) in nearly six years (1.13%, February 2013), according to the latest Landbay Rental Index, powered by MIAC.
However, since the vote to leave the European Union in June 2016, total rental growth across the English regions has been seven times that of London (3.69% to London’s 0.52%). The capital’s property market, which has suffered disproportionately from Brexit uncertainty, saw annual rental growth drop from 1.26% in June 2016 to a low of -0.31% in June 2017, before starting a slow recovery up to 0.67% in January 2019. In total, cumulative rental growth in London since June 2016 has been a mere 0.52%.
The only other region to see cumulative rental growth since the vote to leave the EU below 1% is the North East which has seen rents grow at 0.71%. In contrast, the East Midlands leads the way with growth of 6.28% since June 2016, followed by the West Midlands at 4.75%. The rental growth in England excluding London since the vote is 3.69%, down to 2.5% with London included.
Rental growth is slowing though. England excluding London has seen the lowest annual rental growth in six years (1.11% in January 2019, 1.07% in January 2013). Wales is currently at the lowest it’s been since April 2014 (1.39%) and in Northern Ireland growth of 0.54% is the slowest since the Rental Index began collecting data in January 2012.
Scotland, however, has seen annual rents grow at 1.66%, having steadily grown over the last six months. The average rent in Scotland is now £746, higher than Northern Ireland (£573), Wales (£656), and creeping up to the English average excluding London (£776). This Scottish growth is led by high annual growth in Edinburgh City (5.88%), Inverclyde (3.56%), and Glasgow City (2.49%), while Aberdeen City (-6.62%) and Aberdeenshire (-5.42%) are weighing down on faster national average growth.
Falling rents in London have masked relatively strong growth in the rest of the UK since the Brexit vote, but we are now firmly in the midst of a nationwide rental growth slowdown. This may be some relief to renters, but the cost of renting a property remains high. House prices continue to outpace wage growth, dampening the ability of aspiring homeowners to save for a property of their own, meaning demand for rented accommodation remains robust.
Without a radical house building plan for both first-time buyers and purpose-built rental properties, there is no way supply will ever be able to catch up with demand. The government needs to take action fast, especially in times of economic and political uncertainty the private rental sector is more important than ever.