Subdued annual rental growth seen across most the of the UK
Rents in the private rented sector in the UK increased by 1% in the 12 months to December 2018, up from 0.9% in November 2018, the latest official figures show.
They rose by 1.1% in England, by 0.8% in Wales and by 0.6% in Scotland, while in London the rise was just 0.2%, although this was the first increase since March 2018, according to the data published by the Office for National Statistics (ONS).
Excluding London, rents increased by 1.4%, unchanged from November but overall rental growth has been slowing since the beginning of 2016, driven mainly by declines in London, the index also shows.
However, looking at longer term trends, the figures show that rents increased by 6.9% between January 2015 and December 2018.
On a regional basis, the largest annual rental increase in England was a rise of 2.5% in the East Midlands, followed by growth of 1.8% in the West Midlands and 1.8% in Yorkshire and the Humber.
The lowest annual rental price growth was in London at 0.2%, followed by the North East where rents increased by 0.3%.
New ONS data also shows that the number of households in the private rented sector increased from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million or 63%.
The research also show that younger households are more likely to rent privately than older households and in 2017 those in the 25 to 34 years age group represented the largest group at 35%.
Households in the private rented sector are getting older. Between 2007 and 2017, the proportion of household reference persons aged 45 to 54 increased from 11% to 16% while those aged 16 to 24 dropped from 17% to 12%.
According to Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA), subdued rental price increases may be disguising the true effect of various tax and regulatory changes imposed since the middle of 2015.
‘These measures continue to erode the buy to let sector, and in turn the whole private rental sector. In fact, we may be approaching a watershed, as landlords will only be starting to feel the adverse effects of income tax changes when these are reflected in their tax bills for the first time this month,’ she explained.
‘We will continue to raise concerns about the full effects that tax and regulatory layering will eventually have on property availability and tenant choice. If, as we expect, policies contribute to higher rents for tenants, this will in turn make it harder for those who are trying to save for deposits to buy their own homes,’ she pointed out.
‘Buy to let landlords represent a key element of the Private Rental Sector, providing homes for a very wide spectrum of households. This includes many benefit claimants, who would in the past have had access to social housing. The IMLA will continue to monitor the impact of the tax and regulation changes. We consider it vital that no additional measures should be introduced which could risk further eroding the health of the Private Rental Sector or the well-being of those who rely upon it,’ she added.