Rental prices continued to edge upwards in December, following a stable year in the buy-to-let market, according to the latest HomeLet Rental Index.
This data shows that rents in the UK rose by at an annual rate of 1.7 per cent in December. The average monthly rent agreed on a new tenancy was £907, compared to £892 in December 2016.
However, this index shows there is considerable regional variation, with rents in the South East 1 per cent lower in December than they were a year before. In this region rents have fallen year-or-year every month during 2017.
Despite the slowdown across the South East, rents in London bucked this trend, rising by 1 per cent in December. This increase comes after rents fell in the capital for five months during 2017. The average monthly tenancy agreed in London in December was for £1,524, compared to £1,509 the previous year.
The East Midlands saw the highest rate of rental price inflation in December, with rents up by 4.6 per cent compared to the previous year.
However despite this rise, the average monthly rent in the region is just £611, which is still lower than most other parts of the UK, including Wales and the North East.
Rental price inflation exceeded 3 per cent in three other regions in December: the South West, the North East and Northern Ireland.
Across the UK, rental price inflation remains modest by recent standards. During the first half of 2016 rents regularly rose at an annual rate of more than 4 per cent. In December 2015 rents were up by 3.7 per cent in a year, in a year where rental price inflation did not dip below 3.5 per cent.
The data for December 2017 means it is likely that rents rose at a slower rate than general inflation for every month last year. The latest Government figures show inflation – as measured by the Consumer Price Index – was running at 3.1 per cent in November, the latest month for which this data is available.
HomeLet’s chief executive officer Martin Totty says: “Rental price inflation was modest in 2017: we actually saw average rents across the country fall during May and June.”
He says that while this was not repeated during the second half of the year, rental inflation remains some way off the levels seen in 2015 and 2016.
He adds: “We continue to see a very mixed picture regionally: in areas of the country where rents rose less quickly in 2015 and 2016 rental price inflation was much higher last year. By contrast those areas where rents were previously rising fastest have seen much more modest increases.”