After a year of stalled growth across the country, rental values have finally begun to show signs of bouncing back. The stall in growth came after the announcement that the UK would leave the European Union last June, and has taken until August this year to show signs of recovery.
According to new data released by HomeLet, average rental value across the UK rose by 2.4% year-on-year in August. This is the biggest growth the sector has seen since last year and will be welcomed by landlords and private property managers. However, for renters – many of whom have enjoyed a period of reduced pressure – the news is unfavorable.
This upward trend in average price has been driven by the price of London rents which rose by more than 2.5% on the same month last year. The price of rental properties in London had always kept the average rate of growth on the up until last year when prices slumped following Brexit. Uncertainty over the future of the UK’s position in the global economy, and the severe weakening of the British Pound was, in part, responsible for deterring foreign investment.
Now that there is more political clarity, investment from outside the UK is as strong as ever and the value of rental properties has bounced back.
Additionally, the demand for rental properties has been sustained by the immense difficulties associated with buying a property. The average age of first-time buyers in the UK is 32 – suggesting that people under that age are renting.
The increased demand for rental properties in the UK is also a contributing factor to the rise in rents in the last month.
For landlords, though, there are increasing costs which need to balanced out. Coupled with new legislation brought in this year, it’s not plain sailing for investors.
HomeLet CEO, Martin Totty, said: “Whether the recent strengthening in rents achieved, seen generally across all regions of the country, is driven by more robust demand or by some restriction of supply is hard to judge.
“Either way, landlords will only be encouraged to invest in property over other asset if they’re convinced they can achieve reasonable returns.”
“It seems the elements in solving that particular equation become ever more complex.”