Britain’s renters saw the lowest increase in rents in seven years in 2016 amid an oversupply of rental properties on the market, but this trend isn’t likely to repeat itself in 2017.
The average rent ended the year up 1.6%, half the rate of 2015, according to a report released Sunday by Countrywide, a real estate brokerage. This pushed the average monthly rent bill across the country up to £927 (US$1,130).
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The report found that the slowdown in rental price growth has been driven by an increase in new homes available to rent. Over the year, the average number of available rental properties increased by 12% across the country.
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 with their landlords on price.
As a result, the average cost of renting a home in the capital fell 2.9% last year to £1,246 (US$1,519), the largest decline since 2009. In central London, average rents fell almost 10% to £2,381 (US$2,904). Rents in London are typically higher than anywhere else in Britain.
"As the number of homes available to rent has grown, landlords have had to work harder to attract tenants. The average time [it took] to let spiked in April and has remained resolutely high ever since," Johnny Morris, research director at Countrywide, said.
"Landlords are increasingly tempting sitting tenants to renew contracts with the promise of unchanged or even lower rents," he said.
However, Mr. Morris added that rental prices will likely increase in 2017, as 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.
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The country saw a spike in the number of homes sold before a new 3% stamp duty surcharge was introduced in April for rental investors and second-home owners. This surcharge is likely to deter future investors.