Rents rise as tenant fees ban looms

by Property118.com News Team

10:05 AM, 10th April 2019
About 2 years ago

Rents rise as tenant fees ban looms

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Rents rise as tenant fees ban looms

According to the latest data from HomeLet’s Rental Index, UK rents for new tenancies have begun to rise at a rate not seen in the market for over two years. The annualised picture shows rental values having increased at a higher rate than was seen in 2018 rising by 3.3% in the last 12 months.

The HomeLet Rental Index is showing a move away from the normal fluctuations in the private rental market, with rents for new tenancies now rising at a rate above inflation – one that has not been recorded since October 2016.

The headlines from March 2019’s HomeLet Rental Index are:

  • The region with the largest year-on-year increase in the South West, showing a 5.8% increase between March 2018 and March 2019
  • The average rent in the UK is now £942, up by 3.3% on the same time last year
  • When London in excluded, the average rent in the UK is now £782, this is up by 3.0% on last year
  • Average rents in London are now £1,613, up by 2.8% on last year
  • Eight regional ‘hotspots’ showed an increase in rents of more than the UK average over the first three months of 2019
  • All 12 of the regions monitored by HomeLet showed an increase in rental values between March 2018 and March 2019
  • The March Nationwide House Price Index reports that house price growth remained subdued with London being the weakest performing region in Q1, with prices 3.8% lower than the same period of 2018

Commenting on the data, chief executive of HomeLet, Martin Totty, said: “With the Tenant Fees Act due to take effect in England from 1 June, the acceleration we’re seeing in agreed rental values will come as no surprise to anyone.

“Whilst the aim of the Tenant Fees Act is to reduce the costs that tenants can face, landlords still need to cover the costs that are incurred when setting up a tenancy. With landlords already feeling the impact of taxation changes, the expectation is that costs will be passed back to tenants through higher rents, particularly for new tenancies.

“Landlords’ ability to increase rents will largely be determined by local market dynamics of supply and demand for property. Regional ‘hotspots’, where rents are increasing faster than the UK average over the first three months of 2019 when compared to last year include Wales, Yorkshire and Humberside, the West Midlands, the North East and West, the South East and West, as well as Greater London.”

Commenting on the outlook for 2019, Martin added: “Recently released annual results from a number of major quoted property agents point to a resilient private rented sector in contrast to a subdued sales market. With a still unclear outcome of the Brexit political impasse and the increasing prospect of a further extended delay in the UK exiting the European Union, the contrasting fortunes of the two main segments of the housing market seem likely to continue for some time.

“If demand for rental property remains strong, coupled with the lower frictional costs of moving between rental properties for tenants from 1 June, landlords may yet be able to recover the additional cost burden they will face by edging up rents. This will likely require the current high levels of employment and real wage growth being sustained. But, it could be the case both tenants and landlords get what they want – tenants are relieved of the one-time up-front burden of feed at the commencement of a new tenancy and instead landlords meet these costs and recover them over time via gradual increases to monthly rents.”

As the UK’s largest tenant referencing firm, HomeLet reference over 500,000 tenants every year. The HomeLet Rental Index provides the most comprehensive and up-to-date data on rental values in the UK.

The trends reported within the HomeLet Rental Index are brand new tenancies, which were arranged in the most recent period, providing an in-depth insight into the lettings market.

Head to https://homelet.co.uk/homelet-rental-index/ for more information.


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Comments

Monty Bodkin

11:08 AM, 10th April 2019
About 2 years ago

“With the Tenant Fees Act due to take effect in England from 1 June, the acceleration we’re seeing in agreed rental values will come as no surprise to anyone."
It comes as a surprise this is due to a letting fees ban that hasn't come into effect yet.
Far more likely to be from S24, W&T scrappage, SDLT, weakening of S21, landlord licensing, etc etc.
I don't doubt the fees ban will increase rents but it will only be a part of the cumulative snowball.

don haley

9:43 AM, 11th April 2019
About 2 years ago

Tell me am wrong I see that the way it going will end up with rent control

Simon Williams

10:30 AM, 11th April 2019
About 2 years ago

If rents rise fast over the next few years, it will largely be down to George Osborne screwing up the market leading to cuts in landlord investment. But it will be "greedy" landlords who will get the blame and for sure it will be used as an excuse for rent controls.

The only question is whether these will be soft controls where landlords are still free to set a market rent but restricted on rises during the tenancy or hard controls favoured by Corbyn where there will be an absolute cap on what can be charged.

The one ace in the pack that landlords will always hold and which no politician can ever remove is that there will always be demand for what we supply - and once political rhetoric gives way to the hard reality of under-supply, there is a glimmer of hope that changes will be manageable.

Colin Dartnell

10:33 AM, 11th April 2019
About 2 years ago

Reply to the comment left by Monty Bodkin at 10/04/2019 - 11:08
Spot on.

Rob Crawford

12:52 PM, 11th April 2019
About 2 years ago

Are the rising? Letting Agent Today mentions a study by David Alexander, Apropos that reflects a stagnating PRS and reducing house prices. I have been anticipating rent increases and regularly peruse rightmove & zoopla etc. and see no increase in Bristol area (part of the south west). I am pretty certain that we won't see any significant rent increases until the new year. This will be when landlords affected by section 24 really start to cringe and by then landlords will all have been informed by letting agents of increased client fees. Irrespective of either message, landlords need to keep their eye on the ball, understand their business and associated risks and have mitigation plans for any scenario that we may face!

Bristol Landlord

17:56 PM, 13th April 2019
About 2 years ago

I have properties to let in the BS3 area of Bristol and see from Rightmove that there is hardly anything to rent yet rents seem to be stagnant or even dropping slightly, what’s going on?


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