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New rental prices growing at half the pace of general inflation

Annual rental price inflation on new tenancies rose for the second successive month in March but is still lagging behind general inflation, new figures reveal.

The latest Homelet Rental Index shows that new rents in the UK rose by an average of 1.1% during March on a yearly basis to £904, while new London tenants were paying 1.2% more at £1,546.

The monthly increase was also 1.1% nationally and 1.7% in London.

In comparison, the inflation rate is currently more than double new UK rental prices at 2.3%, but the consecutive rise provided some glimmer of hope as there had been seven months of falls up to February 2017.

Martin Totty, chief executive of HomeLet, said: “In the current housing market, where demand for homes continues to outstrip supply and house prices are out of reach for many buyers, the long-term trend in the private rental sector is likely to be for rental price inflation to continue.

“However, the HomeLet Rental Index continues to reflect landlords’ focus on offering tenants affordable rents, with rents now increasing at a rate significantly below the general rate of inflation in the UK economy.”

Below is a graph that shows that the rental rates in the South East have actually decreased.

Region Average rent in March 2017 Average rent in February 2017 Average rent in March 2016 Monthly variation Annual variation
South East £997 £992 £1,000 0.5% -0.3%

 

The rental market in Buckinghamshire has plateaued and rents have remained static in the past 12 months. It is very rare to find Landlords increasing the rental rates at the renewal stage compared to this time last year and some tenants have even requested discounts on their current rental rates.