A shortage of properties available to rent coupled with strong demand from tenants has led to notable rental price increases across Britain, new figures show.
The average cost of a rental home in Great Britain increased 2.1% year-on-year in November 2019, almost double the 1.1% recorded in November 2018, according to the latest Monthly Lettings Index from Hamptons International, part of Countrywide Group.
The average rent of a newly let home in November 2019 rose to £989 per calendar month (pcm), which is £20 more a month compared with the corresponding period last year.
Southern regions recorded the strongest rental growth this year, led by gains in the South West where rents are were 4.2% year-on-year in November. This was followed by the South East (4.1%) and the East of England (2.6%).
Meanwhile, the North recorded the weakest rental growth of 0.2% following last month’s fall, followed by Greater London (1.1%). The capital has recorded the weakest, or second weakest rental growth in November of the last four years.
The drop in the number of landlord purchases over the past 12 months has meant the volume of homes available to rent has fallen, particularly in London and the South. And this lack of new supply has driven rental growth.
There were 7.8% fewer properties available to rent during the first 11 months of 2019 compared with the same period last year. In the South of England however, where more landlords have sold up, there were 11.7% fewer homes available to rent.
Although landlord purchases have remained subdued throughout the year, there are signs that investors are starting to return to the market, particularly in London, according to Countrywide.
During the first 11 months of the year, landlords acquired 11% of homes sold in Great Britain, the same level as last year, but 5% lower than in 2015. But in November alone, the proportion of homes bought by investors increased to 12%.
London recorded a bigger rise in landlord purchases. Landlords purchased 13% of homes sold in the capital during the first 11 months of 2019, up from 11% during the same period of 2018. This was the first rise since 2015, but is in part due to fewer owner-occupiers transacting in the market.
Aneisha Beveridge, head of research at Hamptons International, said: “Rental growth in Great Britain accelerated throughout 2019, moving back towards its long-term average. Average rents rose 2.1% in November 2019, nearly double the rate recorded last year. While rents rose in every region, the South led the way.
“Rental growth has been driven by a decrease in the number of homes available to rent. The tax and regulatory changes announced in 2016 have resulted in fewer landlord purchases, particularly in the South, causing some landlords to sell up.
“Landlords purchased 11% of homes sold in Great Britain so far this year, 5% less than the peak in 2015. However, after four years of falls there are now signs that landlords are beginning to return to the market - particularly in London where house price falls and steady rental growth are gradually enticing investors back.”