It was a year of two halves, said the specialist rental business, with the first six months of 2016 seeing annual rental price inflation staying consistently at 4% or higher, and peaking at 4.7% in June. But from July onwards rental price growth steadily dropped to the lowest rate of increase in the final month of year.
Rents still high
The average UK rent for a new tenancy starting in December was £892 per month, compared to £877 in December 2015, a marginal increase. In Greater London, rents rose from £1,478 to £1,508 over the same period, an even smaller percentage increase but still a higher rental value.
Rent accounted for an average of 28% of tenants’ household income before tax, down slightly on last December’s figure of 28.4%. In London, it was 31.%, very slightly down from 31.2% last year.
Martin Totty, HomeLet’s chief executive officer, said: “While demand for rental property remains strong, landlords always have to be mindful of tenants’ ability to pay higher prices.
“The data during the second half of last year suggests we have now begun to approach an affordability ceiling, particularly in areas of the country where rental price inflation was previously highest.”