Rental growth in London has reached a four-year high owing to a drop in the number of new homes entering the rental market, according to the latest report from Hometrack, a property market analyst company.
“Rents in London fell over 2017 and 2018 on weaker demand, but they are now increasing by +2.8% – the highest rate for almost four years. The available supply of homes for rent per estate agency branch in London has declined by 20% over the last two years,” Hometrack said in its ‘Rental Market report for Q4 2019.’
The drop in availability is supporting higher rental growth, but stretched rental affordability in London is limiting the level to which rents can increase when compared to other cities, where there is headroom in rental affordability to allow for higher rents. The average rent in London is estimated at £1,641 as against a UK average of £886. Rents in London continue to remain the highest across the UK.
The East Midlands region experienced the highest annual rental growth at 3.8 per cent in 2019 along with Scotland. Other regions that also witnessed growth in rents were South West (3.3 per cent, North West, Yorkshire and Humber (2.8 per cent) followed by Wales (2.7 per cent).
The annual rate of UK rental growth for new listings was +2.6 per cent, up from 1.4 per cent a year ago and the highest growth for 3 years on tightening supply and rising demand.
The available supply of homes for rent per estate agency branch in London has declined by 20% over the last two years. This is a result of much lower new investment by landlords and disinvestment by others, together with renters staying longer in their home.