Rental growth in England have hit the lowest in five years due to economic uncertainty and a sluggish housing market
Rental growth in England has hit five-year low due to economic uncertainty and low level of activity in the housing market, according to a report mortgage lender Landbay published on Thursday.
Rental growth countrywide slowed to an annual rate of only 1.18% in May, the slowest recorded in Landbay’s monthly index since April 2013, the lender said. Price growth has slowed down since the 2015 peak when prices were growing at an annual rate of 2.63%, due to economic uncertainty and a sluggish housing market. In May, tenants across England paid an average rent of £1,234.
Meanwhile, London rents have been falling for nearly a year and a half, though the city is past the worst rental declines, according to the report. In May, rents fell by an annual rate of only 0.8% to an average rent of £1,881 (US$2,522), according to Landbay Rental Index, which uses data from analytical firm Mortgage Industry Advisory Corporation.
Co-founder and chief executive of Landbay, John Goodall said rents are still stretching household budgets despite the market slowdown.
He said in the report that the cost of renting a property remains a huge burden. Rising house prices, falling wages and high inflation continues to dampen the ability of aspiring homeowners to save for a property of their own, meaning demand for rented accommodation remains robust.
Over the past five years, rents have grown more than 10% across England as well as in the United Kingdom. Regionally, East England saw the greatest hike in rents, with prices rising 14.67% in the past five years.
A general housing shortage in the U.K. has kept the supply of buy-to-let properties severely out of kilter with the demand, Goodall said. Until this is resolved, prices will continue to increase.