16 January 2018
Countrywide Lettings Index – December 2017
Predictions for good rental growth in 2018
Rental growth rises by a third from 1.8% in 2016 to 2.4% in 2017 in the UK, and 2.0% excluding London
Yorkshire and Humber goes from the slowest rate of rental growth in 2014 to 3rd / 4th fastest in 2016/17 respectively.
Proportion of homes bought by a landlord drops to 12.5%, a nine year low
Number of homes on the rental market in 2017 was 4% lower than in 2016
Rental growth across Great Britain picked up in 2017. Last year rents rose by an average of 2.4%, an increase from 1.8% in 2016 (table 1). The average rent ended the year at 625 per month in the North (up by 2.0% from the start of the year, in contrast to £960 per month rise across UK (a rise of 2.4%). While rents rose a third faster than they did in 2016, rental growth was still behind than in both 2015 (3.2%) and 2014 (4.9%). Forty-six per cent of landlords increased the rent when re-letting their home, up from 37% in 2016.
Table 1: Cost of new let
Yorkshire and Humber Rental Market is Climbing the Ranks
In a reversal of 2014 when Yorkshire and Humber had the slowest rate of rental growth in England, in 2016 and 2017 this had risen to having the 3rd and 4th fastest rate of growth respectively (table 2). 2017 also saw Yorkshire and Humber demonstrate its value for money for tenants in the rental market, replacing Wales as the sixth most expensive region of Great Britain to rent a home.
Table 2: Regions Ranked by Rental Growth
Last year also saw a drop in the number of homes bought by Landlords. In 2017 landlords bought 12.5% of homes sold (table 3) in Great Britain, down from 14.7% in 2016, 16.3% in 2015. This represents a nine year low. Between 2016 and 2017 the proportion of homes sold to landlords fell in every region, with a respectable 13.6% of homes in Yorkshire and Humber area being purchased by investors in 2017.
Table 3: Proportion of Homes bought by a Landlord in 2017
The falling number of landlord purchases has meant the number of homes on the rental market has dropped. In December 2017 there were 4% fewer homes to rent across Great Britain than in December 2016, with Yorkshire and Humber showing a markedly lower fall of 5%, than that recorded in London of a 21% decrease (the largest of any region) (table 4). Despite the stamp duty hike inducing fall in stock, there were 5% more homes available to rent than there were two years ago.
Table 4: Change in the Number of Homes on the Rental Market by Region – Year on Year
Commenting Johnny Morris, Research Director at Countrywide, said:
“Last year saw the rate of rental growth pick up to get closer to its long-term average. Most of the rise comes from a pickup in rental growth in London, after falls in 2016. Rents rose across every region of Great Britain last year, although the north of England saw rents rise at a slower rate than they did in 2016.
“Rental growth has been supported by a fall in the number of homes on the rental market, with the biggest fall in London. It looks like increased competition between tenants for rental homes will drive faster rental growth in 2018.”