Countrywide : Monthly Lettings Index – December 2016

Press Office

Monday, January 16, 2017

Rate of rental growth halves in 2016

• Rents grew by 1.6% in 2016 across Great Britain to reach an average of £927pm, the lowest annual increase for seven years and half the rate of 2015 (3.1%)
• In London average rents ended the year 2.9% down on 2015 to stand at £1,246, £37 per month less than in December 2015
• The number of homes coming onto the rental market rose 12% over 2016, an increase twice as large as the number of tenants (6%)
• Changing market conditions in 2016 meant landlords were less likely to put the rent up for renewing tenants

The rental market of 2016 was characterised by a reversal of trends. The average rent in Great Britain ended the year up 1.6% (table 1), half the rate of 2015 (3.1%) and the smallest annual increase for seven years. Rents in the North of England rose faster than those in the South, and London moved from having the second fastest rental growth to the third slowest of the 11 regions in Great Britain. The average cost of renting a home in the capital fell 2.9% on last year (table 1), the largest fall since March 2009.

The slowdown in rental growth has been driven by an increase in the number of new homes available to rent. Over the year the average number of available rental properties increased by 12% across the country (table 3) compared to the previous 12 months. While every region saw an increase in available rental stock, London saw the greatest growth, with 22% more homes to rent compared to 2015. Faced with greater choice, tenants have been able to negotiate on price.

Slowing rental growth has also led to a fall in the number of tenants agreeing an increase in rent when renewing contracts. In 2016 a third (33%) of tenants who renewed their contract saw their rent go up, down from 37% in 2015. The average size of the rental increase remained unchanged at 2.1% over the course of the year (table 2). Only renewing tenants in Central London and Scotland saw their average rent drop, by 2.8% and 0.2% respectively.

Commenting Johnny Morris, Research Director at Countrywide, said:

'As the number of homes available to rent has grown landlords have had to work harder to attract tenants. The average time to let spiked in April and has remained resolutely high ever since. Landlords are increasingly tempting sitting tenants to renew contracts with the promise of unchanged or even lower rents.

'Rental growth will likely increase in 2017. Squeezed yields, fewer tax breaks and higher stamp duty rates are likely to deter landlords from expanding their portfolios. Fewer homes on the market will leave tenants with less choice and negotiating power.'

The Countrywide Lettings Index for January will be released on Friday 10 February 2017, embargoed until Monday 13 February 2017.

Table 1 - New lets

Source: Countrywide

Table 2 - Occupied homes

Source: Countrywide

Table 3 - Supply and demand

Source: Countrywide

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Notes to Editors:

About Countrywide plc
Countrywide is the UK's largest integrated property services Group, including the largest estate agency and lettings network. Countrywide's network of expertise combining national scale and local reach helps more people move than any other business in the UK and is structured around four key business units: Retail, London, B2B and Financial Services.

· £19 billion worth of property sold in 2015 - More homes in the UK than anyone else

· £12.1 billion of mortgages completed - Largest single mortgage broker in the UK

· 74,500 properties under management - Largest player in a fragmented market

Countrywide plc's award-winning service has earned the business over 231 high-profile industry awards since 2008 with customers voting Countrywide Best National Agency Group at the 2015 ESTAS awards.