Rent on newly-let homes falls for first time in five years after ‘relentless’ rise
Average rents on newly-let homes have fallen for the first time in around five years, according to a property firm.
Across Britain, the average rent on a newly-let property fell by 0.2 per cent year-on-year in July, marking the first annual decline since August 2020, during the height of the Covid pandemic, Hamptons said.
Despite the small decline, the average rent of £1,373 per month is around a third (34 per cent) or £350 or higher than in August 2020, it said.
The report also said that rents are still rising in some parts of Britain, despite the overall fall, with the Midlands and South West of England leading the way for rent increases.
London recorded the steepest declines, with rents falling by three per cent annually in July – its seventh monthly decline in a row and the biggest annual drop since May 2021.
Wales saw rents decline on an annual basis for the third month in a row, while the North East and Yorkshire and the Humber “joined the club” with falls in July, Hamptons said.
The North of England has seen the sharpest slowdown over the past year, the report added.
Just a year ago, rents were rising at a double-digit pace in the North East (10.6 per cent), with 6.7 per cent growth in Yorkshire and the Humber and 8.6 per cent in the North West.
The average rent on a renewal in Britain stands at £1,290 per month – £83 less than the average rent where a new tenant moves in, according to the report.
It said it is the smallest gap in four years, with landlords keen to keep renewal rents closer to market levels and more closely mirroring broader inflation.
Aneisha Beveridge, head of research at Hamptons, said: “After five years of relentless rent rises, the market has paused for breath.
“Rents on new lets have dipped for the first time since 2020, as falling mortgage rates and a cooling economy ease pressure on the market.
“But for sitting tenants, the story is different. Renewal rents continue to climb, with landlords keen to keep pace with inflation and close the gap with market rates.
“It’s a sign that while demand may be softening, the underlying cost pressures haven’t gone away.”
The Hamptons lettings index uses data from the Connells Group to track changes to the cost of renting. It is based on rents achieved rather than advertised rents.
By Vicky Shaw, PA Personal Finance Correspondent