Figures from the Office for National Statistics (ONS) have shown that the rate of private rental growth has been slowing in recent months, and Alex Upton, managing director for specialist mortgages and bridging finance at Hampshire Trust Bank (HTB), said while average asking rents remained at record highs, the pace of growth was “very different to what we saw over the last couple of years”.
Upton said this was “creating a more balanced market, which tends to suit landlords taking a longer-term view rather than relying on rapid rental inflation”.
Upton continued: “We’re having far fewer conversations centred around expansion for the sake of growth. The focus is much more on making sure every acquisition has a clear role within a portfolio, whether that’s strengthening income, improving resilience or creating longer-term value. That’s reflected in the continued appetite we’re seeing for specialist assets such as houses in multiple occupation (HMOs) and semi-commercial property, where investors are looking to complement an existing portfolio rather than simply add to it.
“That makes maintaining a healthy supply of rental homes increasingly important. Analysis from TwentyEA suggests one in five rental properties have left the market over the past decade, despite continued tenant demand. Delivering a sufficient supply of rental homes needs to remain a priority if the market is to stay accessible for renters while continuing to attract long-term investment.”
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Wales sees strongest rental growth
Average rents rose by 4.9% to £843 in Wales, the strongest growth recorded across the UK.
In England, average rents increased by 3.4% to £1,446 and, in Scotland, by 1.3% to £1,012.
The most recent data for Northern Ireland covered the year to April, which showed a 2.9% growth in average private rents to £877.
Within England, the highest annual rent inflation was in the North East at 6.3% to £781, and despite this growth, it remained the region with the lowest average rent.
Similarly, the rate of growth in London was the lowest at 2.2% to £2,302, and the capital continued to have the highest average rent.
Jeremy Leaf, North London estate agent and a former Royal Institution of Chartered Surveyors (RICS) residential chair, said activity in the rental market had remained “surprisingly robust”.
He added: “Solid rental levels continue to be supported by a lack of supply prompted in part by landlords selling up – albeit in smaller numbers – due to tax and regulatory concerns.
“In our offices, we have noticed a fair number of existing landlords playing a wait-and-see game to see whether rents increase sufficiently to justify remaining in the sector. Demand remains solid but better-quality tenants are in shorter supply.
“Of more concern is the lack of new, younger breed or even larger-scale, build to rent landlords ready to take their place.”
