Rents rise by more than 5% across the UK
The average rent in the UK is now £764 a month – up by 5.1% since April 2015, according to the latest data.
The HomeLet Rental Index also found that rents in London are 7.7% higher than a year ago – at £1,543 a month.
These are HomeLet’s first rental figures since the 3% stamp duty surcharge on people buying second homes or investment properties was introduced on 1 April. They reveal that the tax hike has had little impact so far on the rental market. The annual rise in rents in March 2016 was 4.9% – just 0.2% lower than in April.
Scotland was the best performing region in the UK, with new tenancies costing 11.4% more than they did a year ago. Monthly rents now average £704 – they were £632 in April 2015. The East Midlands was the next best performer with a 7.9% rise in rent for new tenancies. Average rents now stand at £646 a month.
The North West was the only region to see rents fall, albeit slowly – down by 1%. Average rents in the three months to April 2016 were £659 – they were £666 a year ago.
Martin Totty, chief executive of the Barbon Insurance Group, which owns HomeLet, says: “It may be that over the next several months, the trends observed in the rental market begin to reflect the signs of some slowdown in the rate of house price growth that we are now beginning to see, and that will be something to watch closely.
“But more broadly, there has been very little to alter the fundamental relationship between demand and supply, especially in those parts of the country where demand-side pressure is greatest.”
Mr Totty says that landlords may “be feeling squeezed” as a result of the taxation changes George Osbourne has introduced in recent months. “We will have to see whether landlords try to pass their higher costs on, whether buy-to-let property investment diminishes in popularity and whether tenants are able to afford further increases in rents,” he adds.
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.