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Rents in the regions grow faster than UK average

Rents in the UK’s regional hubs are growing significantly faster than both London and the UK average, as workers continue to relocate from London, buy-to-let lender Landbay has found.

Rents rose by 0.03% in November 2018 which, although the lowest monthly rise since the start of the study, feeds into growth of 0.97% in the year; 0.04% higher than the same point in 2017. This is mostly down to London’s improved performance, recording growth of 0.58% this year.

John Goodall, chief executive and co-founder of Landbay said: “It’s hard to escape the fact that we’ve seen a slowdown in the property market due to Brexit uncertainty and recent tax and regulatory changes for landlords.

“In that context, these growth figures show just how resilient property continues to be as an asset class. As with all investments, it is prudent to have a diversified portfolio – backed up in the case of buy-to-let by London’s recent fall and revival alongside strong performances from cities including Leeds and Manchester.

“London’s green shoots paint a positive picture for landlords ahead of what will likely be testing economic times with Brexit and further interest rate rises expected.”

The average monthly UK rent currently sits at £1,212, a rise of £10 since the start of the year. When London is removed, rents sit at £769, up from £761 since the beginning of 2018.

Rents are rising in 27 of the 33 London boroughs, a very different picture from this time in 2017 when rents were falling in 26 of the capital’s boroughs. While every region in the UK has seen rents rising, the speed of growth has not been consistent – with all areas other than London experiencing a slowdown.

The East Midlands (2.25%), Yorkshire & Humber (1.50%) and West Midlands (1.48%) have all experienced the most substantial growth in the past year and are expected to climb further as we head into 2019.

Growth in the North East peaked to its highest point in two years in November 2017 but since then growth has depreciated to 0.05% on an annual basis – it’s lowest growth rate since August 2013.

While London’s rental growth stands at 0.58% year-on-year, it is now cities like Leeds (2.54%), Birmingham (2.05%) and Manchester (1.91%) which are experiencing accelerated annual growth.

This could be attributed to internal migration as millennials leave the capital at the highest rate in almost a decade. Since the start of 2012 London has seen a net loss of nearly half a million residents as people vote with their feet amid the growing living and housing costs.

However, some will also be moving due to work commitments.

MediaCityUK now employs more than 3,000 people at its base in Salford, after welcoming 2,300 BBC employees back in 2010. Salford has seen rents rise by 2.62% year-on-year and 22.76% cumulatively since January 2012, more than double London’s pace (9%).

HSBC has announced it will move 1,000 jobs to Birmingham, whilst Leeds has seen jobs created by companies including Burberry.

Goodall added: “The truth is there is now a twin speed rental market as London’s rent growth is dwarfed by cities such as Leeds and Manchester.

“This is being fuelled by the capital’s millennial exodus as countless young professionals realise there is more to life than London. This same message carries weight with landlords, who are increasingly seeing the value of investing in these regional hubs.

“In many ways it could be argued that the ‘Northern Powerhouse’ is beginning to take effect amid stretched affordability and a harsher tax regime.”

Source: Mortgage Introducer

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UK rents outpacing house price growth but are below the cost of living

UK rents are now rising above the rate of house price growth but are just below the UK inflation rate.

Figures from tenant referencing service HomeLet found that new average rents were up 2.1% annually in October to £928 a month.

In comparison, data from the latest Halifax House Price Index showed average growth was at just 1.5%.

Rental growth is, however, still below the inflation rate of 2.4%, suggesting prices are below the cost of living but still higher than the growth in property values.

The biggest increase in rents during October was in Northern Ireland, up 4.5% to £653 per month, while London still has the highest rents, at £1,619 – up 4% annually.

When London is excluded, the average UK rental value was £768 in October, up 1.7% on last year.

Martin Totty, chief executive at HomeLet, said: “Average UK-wide rents continue to increase year-on-year broadly in line with the current rate of inflation and the growth in average wages, meaning affordability in most parts of the country is little changed.

“The exception is London and the south-east, where average rents have increased above both inflation and average wage growth. In contrast to house price trends in this region of the country, activity levels in the private rented sector remain resilient.

“Landlords committed to the sector here seem able to command higher rents, potentially providing some offset to the negative headwinds of taxation changes some will have experienced.”

Commenting on the figures, Adam Male, director of lettings at online agent Urban.co.uk, said: “While many are resigned to the rental sector due to the inflated cost of home ownership, the continued escalation of rental costs is, in fact, a second facet of the UK housing crisis.

“An increase in rental prices across 11 out of 12 regions highlights the plight of tenants across the UK and the uphill struggle they face just to put a roof over their head.

“Rather than work with the nation’s buy-to-let landlords, who act as the backbone of the UK rentals sector, the Government has introduced numerous legislations to ‘level the playing field’ between landlord and tenant.

“The reality of this excessive and consistent campaign against the buy-to-let sector has been a reduction in rental properties, an uplift in rogue landlords and unsuitable living conditions and a spike in costs for UK tenants.”

Source: Property Industry Eye

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Average rents in UK increased by just 0.56% in 2017, latest index shows

Average rents in the UK rents increased by 0.56% in 2017 to £1,196 but fell in London and nationally were flat month on month, the latest buy to let index shows.

The biggest annual growth was in Wales with a rise of 1.36% taking average rents to £643, followed by Scotland with a rise of 1.18% to £729. Rents were up 0.75% in Northern Ireland to £563 and by 0.5% in England to £1,227.

If London is excluded than UK rents increased by 1.29% to £759, according to the Landbay index. And it shows that the only place where rents fell year on year was in London with a drop of 0.8% to an average rent of £1,872.

Month on month rents were either flat or fell in December. There was a marginal 0.01% rise in England, a fall of 0.12% in Northern Ireland, a fall of 0.1% in Scotland, a fall of 0.06% in both London and Wales. UK wide rents were flat on a monthly basis but if London is excluded they increased by 0.03%.

A breakdown of the figures show that commuter towns around London have seen some of the biggest rises in rents. Some 17 out of the 40 towns ranked as the most popular London commuter hotspots have seen rents rise.

They have increased in these towns by 1.68% in the 12 months to December 2017, led by a rise of 2.06% in Cambridge and a rise of 1.58% in Brighton. But some commuter areas have seen annual rents fall, most notably Guildford, Reigate and Woking with a decline of 0.73%.

Landbay suggests that there are now signs that demand for low rent accommodation by longer distance commuters to London is pushing up rents in these areas. Some 31 of the 40 most popular commuter routes have seen rents rise by more than the UK average of 0.56%, and by as much as 2.15% in Southend on Sea and 2.06% in Cambridgeshire.

Only Slough, Buckinghamshire and Surrey have seen rents fall with declines of 0.04%, 0.31% and 0.73% respectively while Reading and Bracknell Forest have seen sub-average growth at 0.03% and 0.05% respectively.

According to John Goodall, Landbay chief executive officer, at a time when rents in London are falling, some people living in commuter towns may even be considering a move into London.

Source: Property Wire