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Rents dip in February as Stamp Duty effect eases competition

Average rents in England and Wales fell by 0.6% in February to reach £707 per month, as the rush of buyers to beat the end of the Stamp Duty holiday eased tenant competition, according to LSL Property Services.

LSL’s latest buy-to-let index shows that while rents fell on a monthly basis, year-on-year rents were up by 3.5%, or £24 per month, in February.

The biggest monthly falls were seen in the East Midlands, where rents dropped by 2.2%, and the West Midlands, where they declined by 1.8%. Rents dipped by 0.4% in London, only the second monthly fall in the capital in the past 14 months.

Rents rose in three regions, increasing by 0.7% in the North East and by 0.5% in both Wales and the South West.

In the last 12 months the largest increases in rents have been in London, where rents rose by 5.6%, and the East of England, where rents increased by 5%. On an annual basis, rents have only fallen in one location, dropping by just 0.2% in the East Midlands.  

David Brown, commercial director of LSL Property Services, says that in the run up to the Stamp Duty holiday deadline, a number of tenants either bought property or seriously considered doing so, rather than renewing their contract or seeking another rental property, meaning there was less competition among renters.

He says: “In the longer-term, it’s difficult to see a prolonged decrease in the tenant demand underpinning rental inflation. There are already indications that mortgage lending is falling back, and that mortgage rates are beginning to climb, which will limit the number of prospective homebuyers leaving the rental sector.

“While the NewBuy scheme may support a limited number of first-time buyers, its impact will undoubtedly be offset by the removal of the Stamp Duty holiday.”

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