Figures from the Office for National Statistics (ONS) showed the rate of growth was down from the 5.7% annual increase recorded in the 12 months to August.
A nervous private rental market
Nick Leeming, chair of Jackson-Stops, said the figures pointed to a slower market and the weaker growth reflected “pre-Budget nerves” alongside a “decade-high level of property for sale softening sellers’ pricing power”.
He said the steadying of house prices in August showed that demand and supply fundamentals continued to “underpin momentum”.
Leeming added: “Policy speculation will continue to cloud the outlook until the Budget is announced, with October’s house price data release – due in December – poised to reveal the impact of buyer hesitancy and whether the usual autumn bounce takes shape.
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“Looking ahead, it’s clear the government must tread carefully with a property market vulnerable to external shocks. Tax reform must be designed to reduce friction whilst keeping prices stable, in which unexpected consequences are factored into current thinking. The reality is that many homeowners are asset-rich but cash-poor. Policies that stifle transactions or deter investment risk reverberating far beyond the housing sector.”
Jeremy Leaf, North London estate agent and a former Royal Institution of Chartered Surveyors (RICS) residential chair, said the “nervousness” seen in the sales market was apparent in lettings too, adding that it was “not just the Budget and the potential impact of financial changes but the imminent arrival of the Renters’ Rights Bill, which is prompting more than a stir”.
Leaf added: “Tenants are bearing the brunt as landlords are selling up whereas those remaining are becoming more strict about referencing and guarantors in anticipation of finding it more difficult to remove problematic tenants when the new set of rules is in place.
“On the other hand, tenants are still concerned about affordability, which is evidenced in the higher-than-average rent increases noticed in areas away from the more expensive London and the South East.”
Regional changes
Average rents rose the most in Wales and Northern Ireland, both reporting a 7.1% increase to £815 and £865 respectively.
In England, there was a 5.5% rise in average private rents to £1,410, while the average rent in Scotland was £1,004 per month, indicating a 3.4% uplift.
The rate of growth across all regions was slower than the previous month.
The North East continued to have the highest annual rent inflation in England, rising 9.1% to £750 per month. This was slightly lower than the yearly growth of 9.2% in the 12 months to August.
The lowest annual inflation in England was in Yorkshire and the Humber at 3.8% to £829 – however, this was a higher rate of growth than the 3.4% seen in August.
Average rents rose by 5.3% in London, down from 5.7% in August, coming to an average of £2,260 per month. The ONS said the rate of growth in London has slowed the most since its peak, and was now 6.2 percentage points lower than the 11.5% rise seen in November last year.
It was also the area with the highest monthly rent, while the North East was the cheapest.
Detached properties attracted the highest rent in September, at £1,544, while the lowest was for flats and maisonettes at £1,327.
Average rent was highest for properties with four or more bedrooms, at £2,021, and lowest for rental homes with one bedroom at £1,099.
