Monday 15 January 2018
Rental growth accelerates in 2017
Rental growth across Great Britain picked up in 2017. Last year rents rose by an average of 2.4%, an increase from 1.8% in 2016 (table 1). The average rent ended the year at £960 per month, up by £23 a month from the start of the year (table 1). While rents rose a third faster than they did in 2016, rental growth was still behind than in both 2015 (3.2%) and 2014 (4.9%). Forty-six per cent of landlords increased the rent when re-letting their home, up from 37% in 2016.
In a reversal of 2016 when London had the slowest rate of rental growth in England, last year it had the fastest (table 2). Over the course of 2017 rents in London rose 3.2% (table 1), reversing the 0.8% fall recorded in 2016. Scotland (3.3%) was the only region in Great Britain where rental growth outstripped the capital. 2017 also saw Yorkshire and Humber replace Wales as the sixth most expensive region of Great Britain to rent a home.
Last year also saw a drop in the number of homes bought by Landlords. In 2017 landlords bought 12.5% of homes sold (table 3) in Great Britain, down from 14.7% in 2016, 16.3% in 2015. This represents a nine year low. Between 2016 and 2017 the proportion of homes sold to landlords fell in every region, nowhere more so than in London. This means in the capital 5,400 fewer homes were bought by a landlord in 2017 than in 2016.
The falling number of landlord purchases has meant the number of homes on the rental market has dropped. In December 2017 there were 4% fewer homes to rent across Great Britain than in December 2016, with London recording a 21% fall, the largest of any region (table 4). Despite the stamp duty hike induced fall in stock, there were 5% more homes available to rent than there were two years ago. However in London the number of homes on the market has dropped by a third.
Commenting Johnny Morris, Research Director at Countrywide, said: “Last year saw the rate of rental growth pick up to get closer to its long-term average. Most of the rise comes from a pickup in rental growth in London, after falls in 2016. Rents rose across every region of Great Britain last year, although the north of England saw rents rise at a slower rate than they did in 2016.
“Rental growth has been supported by a fall in the number of homes on the rental market, with the biggest fall in London. It looks like increased competition between tenants for rental homes will drive faster rental growth in 2018.”
The Countrywide Lettings Index has been running since 2012 and we continually seek to improve its accuracy. From June 2017 the methodology was changed to reduce the impact of seasonality and volatility in the rental market.
While the index remains a mix adjusted series, rent and rental growth figures for each month are now based on a three month rolling average rather than lets agreed in the last month. The most expensive decile of homes let has been excluded to reduce volatility and the mix has been updated to include the most recently published government stock statistics.
The Countrywide Lettings Index uses data from Great Britain's largest letting agent to track changes to the cost of renting. The index is based on the 90,000 homes let and managed by Countrywide in each year, adjusting for their location and type. It is based on achieved rather than advertised rents and the published monthly rental figures are an average of the new lets and renewals of tenancies over a rolling three month period.