Tenants in newly let homes saw the cost of renting fall year-on-year in February for the first time in six years, Countrywide’s letting index has revealed.
Across England, Scotland and Wales rents fell by 0.6% in the year to February driven by a considerable drop in Greater London (-4.7%) and a fall in the South East (-2.6%).
When taking London out of the equation rents were up by 0.8% year-on-year, with the strongest increase taking place in Wales (5.3%), the East of England (3.1%) and Midlands.
Johnny Morris, research director at Countrywide, said: “Rents are growing in most of the country but falls in London and the South East are dragging down the national growth rate.
“Recent falls in London and the South East are small in the context growth in recent years. Rents are a third higher in London and the South East than in 2007.
“Early signs point towards 2017 being a rare year where rents rise faster in the north of the country than in the south.
“While rents are likely to track any increase in earnings, affordability in London and the South East remains stretched. That is likely to limit rental growth.”
Research from Landbay also found that rents fell in London bringing rental growth to just 1% in the 12 months to February 2017 – its lowest level since April 2013.
However John Goodall, chief executive and founder of Landbay, reckoned this apparent reprieve for tenants was unlikely to continue.
He said: “Although this could give the impression that the market is beginning to turn a corner, this is a situation that is unlikely to change in the foreseeable future.
“Demand for rented accommodation will remain robust over the coming months and years and continue to stoke up rental values, as rising house prices, falling wages and rising inflation dampen the ability of aspiring homeowners to save for a property of their own.
“Whether tenants are renting as a stepping stone on the way to home ownership or, increasingly, renting for life, people rely on a well-served buy-to-let market to ensure rental growth doesn’t become unbearable.
“The Chancellor’s decision not to raise the stamp duty threshold in this month’s Budget was yet another blow for first-time buyers, so it’s important that we now see some clear follow through to the promises made in the housing white paper to ease at least some of the pressure on Generation Rent.”