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Rental growth slows to 1.12% in year to November: Landbay

UK rents grew by 1.12 per cent in the year to November, a slow down from growth of 2.34 per cent by November 2015, a Landbay report has found.

Average rent hit a record £1,188 per calendar month, up from £1,177 at the turn of the year.

The national average is inflated by London, where rents hit a peak of £1,894 in April, before entering negative territory in May, the month before the EU referendum, and falling in every successive month to £1,883 by the end of November.

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However, overall, London rents shrank by 0.31 per cent in 2016, while the rest of the UK saw rents rise by 1.91 per cent.

Rents in the UK excluding London rose 1.91 per cent to reach £749 by the end of November.

Landbay chief executive and co-founder John Goodall says:When you look at the raft of regulatory, political and economic challenges coming to bear on the buy to let sector in 2016, it’s clear to see why rental growth has slowed this year, but the nation has not been equally affected.

“London has been something of a millstone for the rest of the UK, and tenants will no doubt be relieved that rental pressure has eased since the referendum, but the fall in rents is unlikely to last, and we expect the tide will turn in 2017.

“A new stamp duty levy, tighter affordability controls from the PRA, and the removal of mortgage interest tax relief all look likely to restrict the supply of rental housing in 2017, and tenants will have little choice but to compete for what properties are on offer.

“As a result we expect rents to rise faster than the pace of inflation next year, with growth tripling to 3 per cent by the end of 2017.”

Landbay’s report also finds that tenants close to the HS2 and Crossrail 2 rail projects have faced intense rental pressure.

All of the key HS2 stations north of London have seen rental growth above the overall national average of 8.8 per cent in the five years since the route was confirmed in January 2012, says Landbay.

Similarly, tenants living near four of the six Crossrail 2 termini stations have seen rent increases above the national average of 8.02 per cent since the route was announced in February 2013.

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