Britain’s average new let now costs £964 per calendar month, but July saw the overall slowing down of rental growth continue, with costs increasing by just 0.2%, the latest lettings index shows.
Across Britain, the highest rental growth was recorded in Wales, with rents up an average of 4.9% year on year to £680, followed by the Midlands, up 2.4% to £684, while 0.9% increases were recorded in both the South West and the North – leaving averages standing at £1,042 and £638 respectively.
Elsewhere, the East of England saw rents increase on an annual basis by 0.7% to an average of £950 a month, and Scotland experienced a climb of just 0.2% year on year, with an average of £649, according to the index from Hamptons International.
However, London was shown to buck the overall trend for the second month in a row, with average rents down 1.6% year on year to £1,682. A breakdown shows that rents fell by 1.7% in inner London, but still remain high at £2,582, while rents further out were down by 1.5% to £1,511.
‘Rental growth slowed to 0.2% across Britain in July. Falls in London were offset by higher growth in the rest of the country. Inner London experienced the greatest fall, with rents decreasing for the third consecutive month,’ said Aneisha Beveridge, analyst at Hamptons International.
The report also found that there is currently a record low in the number of overseas landlords operating within the UK lettings market, with data for the first half 2018 indicating that just 6% of Britain’s landlords are based outside the UK.
Since the firm began recording this data back in 2010, the proportion of lettings by overseas landlords has halved, with figures from the first half of 2010 showing that overseas landlords were responsible for 13% of all UK lettings. However, the number of international based landlords has increased in London this year.
Indeed, the figures for London continue to fluctuate, with the proportion of homes in the capital let by overseas landlords peaking at 20% in the second half of 2011, but ending 2017 at record lows of 7%. However, these figures are on the rise again, with a 5% increase between the second half of 2017 and the first half of 2018 – placing London quite significantly out of kilter with the rest of the UK.
The largest proportion of international landlords hail from Western Europe at 44%, followed by Australasia at 16%, North America at 14%, Asia at 12%, and 9% in the Middle East. However, London’s proportion by global region data is different again, with 30% coming from Western Europe followed by 20% from Asia.
Beveridge suggests that the combination of the increase in stamp duty and annual tax on enveloped dwellings (ATED) and the increase in tax bills for foreign investors has deterred foreign investors, whilst also pointing to the removal of exemption from capital gains tax, which was introduced in 2015.
‘However over the last year, London has bucked the trend with a pickup in international landlords. Sterling’s depreciation, effectively offering international buyers a discount, combined with a softening London market, has helped offset the additional higher costs of owning a buy to let property in the capital for foreign investors,’ she said.