South-west emerges as hotspot amid slower rent rises
Average rents in the UK rose by only 0.7 per cent over the last 12 months, the November HomeLet Rental Index has revealed.
The survey put the average monthly rent at £904, compared with £898 in November 2016. The low rate of increase continued a longer-term trend of static prices, being the 11th successive month that rents lagged behind inflation. In November itself, rents actually declined on average by 0.3 per cent.
Not since December 2016 has rental growth exceeded Consumer Prices Index (CPI) inflation, with average prices of 1.7 per cent compared with a CPI rate of 1.6 per cent.
This suggests many landlords are wary of putting up rents due to the fact that wages have also lagged behind inflation, meaning some tenants may have great difficulty paying higher rents.
The situation may soon change, of course, with the Bank of England expecting inflationary pressures to ease in the next few months, aided by the recent base rate rise. Even so, investors may be looking closely at regional variations for good investment opportunities.
London, the south east and the east of England have all seen overall declines, but another part of the south has done very well; the south-west.
In this region, the average rent was up 1.5 per cent in November, making it one of only two parts of Britain to see an increase, along with the north east at 0.9 per cent. On an annual basis, rental growth was 3.4 per cent, second only to the 4.4 per cent recorded in the East Midlands. Given that the latter endured a 0.5 per cent decline in November, it may be that places like Nottingham and Leicester were a better prospect than Bristol or Exeter a few months ago, but not now.
The north-east's performance over the year is also worth noting, as it saw the fourth highest growth at 3.1 per cent. Northern Ireland was third with 3.3 per cent, but witnessed a 0.5 per cent decline in November.
A recent survey by the House Shop found that the south-west's biggest city, Bristol, now has the third highest rate of rental demand in the UK.
However, despite its recent decline, London remains top of the list, with Birmingham second.