Rents across the United Kingdom have suffered a decline for the very first time in five years. London is seen as the culprit of the decline. It should be noted though that although there is indeed a decline, the figures are quite tiny to be considered that significant and is merely driven by what is going on in the London market. Elsewhere, however, the rents are actually up.
According to the figures from the national Rent Review of Landbay, rents experienced a fall of 0.01% last month. According to the buy-to-let lender, these are figures that were lifted from an analysis of agreed and advertised rents data on ONS and Zoopla. The figures were from about 100,000 entries and the data goes back to as far as the year 2012.
While the decline may be truly small, it is quite noteworthy due to the fact that this is the very first time that rental rates have actually declined across the country for the last five years. However, the drop is being attributed to capital slowdown wherein 26 out of the total 36 boroughs suffered falls.
For this year, the average rental rate for a UK property has shown a growth of 0.53%. Due to the decline in the rates in London, this has dropped to 0.83%. Many are seeing this to have dampened the otherwise rental growth which has remained quite resilient elsewhere in the country at 1.27%. Today, the average figure for a UK rental without London in the equation is £759.
It is worth noting though that the slowdown in the growth for rental rates in the country has not been consistent all throughout. The East Midlands, for instance, has seen an overall increase of 2.13% this year. The South-west is also up 2.13%.
Landbay’s chief executive, John Goodall, stated that the past two years have seen landlords facing up a lot of challenges. For instance, there are the reductions to the tax relief, the stricter regulations, as well as the increase in the Stamp Duty tax imposed when purchasing a property that is intended for buy-to-let purposes.
According to him, it would make sense for all these elements to cause the rents to get pushed up. However, there are certain factors that have managed to get the consistently rising costs shouldered. This includes the enduring TFS or Term Funding Scheme by the Bank of England as well as the interest rates hitting a record low. The TFS has successfully injected much-needed affordable capital to banks and the low-interest rates have ensured that the borrowing costs will remain low.
Still, the interest rates are consistently rising now. The TFS is also expected to end come February of next year. With all these happening, it is expected that the rental pressure is likely going up pretty soon. Keep up with the latest news and trends in UK property by researching out Junaid Iqbal Memon online.