MARCH 03, 2017 | BY A & S Property
Rents rise below inflation amid concerns about tenants’ ability to pay
Rental price inflation is now running below general inflation as measured by the consumer price index, as a growing number of buy-to-let landlords recognise that tenants have, or are, reaching an affordability ceiling, fresh figures show.
New data from the HomeLet Rental Index reveals that the annual rate of rental price growth hit 0.8% in February, below the general rate of inflation, which is now running at 1.8% according to official statistics.
The average UK rent for a new tenancy starting in February was £895 per month, up from £888 a year earlier, based on HomeLet’s figures.
Annual rental price growth has fallen from a high point of 4.7% in June 2016, with the reduction in the pace of rental price inflation most marked in areas of the country where rents were previously increasing fastest.
But research conducted by HomeLet shows that more than half of the 3,726 landlords surveyed may have no alternative but to increase rents in the face of mounting cost pressures, caused in part by April’s impending tax changes, although almost a third of those - 29% - plan to defer this to 2018.
Intriguingly, the survey also found that landlords appear to be acutely conscious of the need to ensure rents are affordable for tenants, as part of wider efforts to maintain strong relationships, with 96% of landlords saying they are happy with their existing tenants.
Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company, said: “Our research again demonstrates that the vast majority of landlords have positive working relationships with their tenants.
“In recent months, we have seen landlords treading very carefully with rental price rises, amid concerns about tenants’ ability to pay. With more than one in five landlords [21%] blaming an increase in their tax liability for raising rents, it remains to be seen if this can sustain.
“Landlords will hope the Chancellor does not make it harder for them to continue supporting their tenants in this way, with further changes to the tax system or legislation, as he prepares to unveil his Budget on the 8th March.”
Rental figures from the February 2017 HomeLet Rental Index
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