London rent fall drags down national average
The cost of rents has seen a fall for the first time in six years, as the cost of new tenancies in London and south-east England dropped dramatically. Newly agreed rental contracts across England, Scotland and Wales in February saw a decline of 0.6 per cent a month compared to the same month last year, according to Countrywide. This is the first drop since November 2010.
While the whole of these areas saw a drop of three per cent a month on average, London saw the biggest decrease as rents fell by around 4.7 per cent, with the average cost reaching £1,246 a month. The south-east saw rents go down by 2.6 per cent to £1,152, with both of these drops pulling down the national average.
According to Johnny Morris, research director at Countrywide, this fall was due to a nine per cent increase in the number of properties hitting the rental market across the country. This was due to the rush to buy investment properties ahead of the new three per cent stamp duty surcharge that came into effect last April.
This surge in investment meant that there were 18 per cent more rental properties on the market this February ahead of the same month last year in London alone. As a result, London and the south-east had more available properties, but there were fewer tenants looking for rental homes.
Mr Morris said: “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.”
Countrywide's figures tell a different story compared to those from the Office for National Statistics, which showed that January 2017 saw a rise of 2.2 per cent compared to the same period last year.