UK rents rise at fastest rate in three years
UK residential rents are continuing to climb due to a lack of supply, with many potential buy-to-let investors squeezed out of the market.
The annual rate of UK rental growth was 2% in the third quarter, up from 1.3% a year ago, according to a survey from property website Zoopla.
Growth has recovered from a low of 0.5% in June 2017 due to a tightening in rental supply as a result of tax changes and fewer investment buyers, rising levels of employment and affordability constraints limiting access to home ownership in southern England.
UK residential rents are continuing to climb due to a lack of supply, with many potential buy-to-let investors squeezed out of the market.
The annual rate of UK rental growth was 2% in the third quarter, up from 1.3% a year ago, according to a survey from property website Zoopla.
Growth has recovered from a low of 0.5% in June 2017 due to a tightening in rental supply as a result of tax changes and fewer investment buyers, rising levels of employment and affordability constraints limiting access to home ownership in southern England.
UK rental growth is running at just below the 10-year average of 2.3%.
In London, the average rent in the third quarter of the year was £1,622 per month and tenants paid 2.3% more in rent compared a year earlier. It remains the least affordable part of the UK, with rent taking up 46% of earnings for a single person.
The cost of renting a home rose fastest in Nottingham, Leeds and Bristol in the past year. They were the only three UK cities where rents rose faster than UK average wage growth of 4%.
Tougher tax measures
Investors have been put off the buy-to-let market due to punitive tax measures brought in during George Osborne’s time as chancellor, according to Zoopla’s report.
Osborne surprised landlords when he brought in a stamp duty surcharge of three percentage points in 2015’s autumn statement.
The buy-to-let market was already digesting the chancellor’s announcement in the July 2015 summer Budget to cut mortgage interest tax relief.
Buy-to-let landlords have faced higher taxes as they have been blamed for pushing up property values and squeezing first-time buyers out of the market.
The government introduced both measures in a bid to slow the rise in house prices.
The changes to mortgage tax relief came into effect in April 2017. The stamp duty hike came into force on April 1, 2016, and applies to property purchases in England, Wales and Northern Ireland.
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