The UK rental market keeps on delivering good news for investors. In a time of some political and economic uncertainty, the Private Rented Sector (PRS) is a welcome stable foundation for many landlords.
The latest Rental Index from HomeLet shows that rents in the UK rose by 3.8% in February compared to the same month in 2018, with the average monthly rent (including London) now standing at £940. Excluding London, the national average is £782, representing year-on-year growth of 3.2%.
Most importantly, the Index shows that the growth was shared across the whole of the UK; with all 12 regions seeing annual growth we can be confident that the rental market is healthy and growing.
The South West recorded the largest annual rise with growth of 7.7%. The next best were the South East (5.1%) and Wales (3.9%), areas like the North West (2.9%) and the West Midlands (2.8%) also performing well.
As well as an annual increase, the average UK rent grew 0.9% month-on-month between January and February.
Within London, the highest annual rise was in Wandsworth (10.1%), followed by Haringey and Islington (both 9.6%), Ealing (9.1%), Bexley and Greenwich (both 7.8%) and Hackney and Newham (both 7.2%). In contrast, rents actually fell in some areas of London including Croydon (-3.7%) and Hounslow and Richmond upon Thames (both -3.2%).
Overall, rents in London increased by 4% more than they did in February 2018 and the capital’s average rent has reached £1,599 a month – more than 100% higher than the national average outside of the city.
It is interesting to note that rents in London are continuing to rise at the same time as reports of minor falls in house prices are arriving. For instance, the latest Knight Frank prime sales index shows that prices in the capital’s prime residential market fell by 4.8% in the last year, and 1.4% in the last quarter.
Tom Bill, head of London residential research at Knight Frank, blames the fall in prime markets on Brexit uncertainty, but is hopeful for the future: ‘Despite the number of exchanges declining as a product of Brexit uncertainty, this growing pent-up demand suggests activity levels will increase as political clarity returns.’
Obviously the London prime market does not bear much resemblance to the actual housing market, but that analysis should hold for all classes of property. There is no doubt that many people are waiting to see what the outcome of that is before buying or selling – but that does not mean demand is falling. People are still planning to buy.
From an investment point of view this opens up the possibility of making your next purchase whilst prices are slightly depressed in a market where some are temporarily standing on the sidelines. There are deals to be had and this might be the perfect time to take advantage of them.
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