According to Countrywide, the UK’s largest estate agency and property services group, the annual rate of rental growth in Britain doubled from 1.1% to 2.2% between June and July. The increase has been caused by a turnaround in the London market, the group said.
The figures are especially surprising as they mark the end of eight consecutive months of falling rents in London. Countrywide’s Monthly Lettings Index for July 2017 cited that this turnaround was caused by the sudden drop of available properties to rent in the capital.
“The steady fall in the number of homes available to rent in London has been driven by a drop in the number of landlords buying since the new stamp duty rates,” the report revealed. “July saw the proportion of London homes bought by a landlord fall to the lowest level for seven years. Just 10.5% of the homes sold in the capital last month were bought by a landlord, the lowest level since August 2010 (9.7%) and half the 2015 average (20.9%).”
The drop in the number of homes to rent in London has not been matched by a fall in prospective tenants. The number of would-be tenants in the capital was unchanged on 2016 (up 1%), meaning that the same amount of people were chasing fewer available homes.
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However, outside London, the number of tenants registering was down 5% on last year.
“The rush to beat higher stamp duty rates in April 2016 caused a spike in the number of homes to rent, but that has now worked its way through the market,” added Johnny Morris, research director at Countrywide. “The stock of homes to rent is now falling in the more expensive parts of the country because higher tax rates have dissuaded large numbers of landlords from buying. Ultimately this means fewer homes on the market and higher rents.”
