Countrywide’s lettings index for July showed that despite tenant demand rising nationally and rental prices increasing 1.5% year-on-year across Great Britain to £951 a month, this is still the slowest rate of growth since 2012.
As well as London, rents fell in the south wast, Wales and Scotland from a year earlier, with the highest growth recorded in the north and midlands.
A rise in the volume of homes entering the rental market has slowed or in some cases reversed rental growth, in part driven by a rush among buy-to-let investors to complete purchases before the Stamp Duty deadline. However, Countrywide pointed out that the number of homes available to rent has continued to rise since and has led to less deals being agreed above advertised rents.
Some 16% of tenants paid above the asking rent for a home in July last year, dropping to 7% in July this year. The picture in London was even bleaker during July, as 11% homes were let for more than the asking price, down from 32% a year earlier.
Johnny Morris, director of research at Countrywide, said: “The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing. Uncertainty in the sales market in the run up to, and after the EU Referendum has caused more discretionary sellers to turn to the rental market.
“While rental price growth has slowed, current market dynamics are likely to accelerate the growth of renting. It seems that with more stock and demand from tenants we will see the number of households renting increase in 2016.”