February | 2019 | CityLets YorkCityLets York

18 February 2019

HAMPTONS RENTAL INDEX – FEB 2019

Tenants spend £1.9 billion less in rent than previous year, which is the first time this figure has fallen in more than 10 years 

• Tenants in Great Britain paid £59.1 billion in rent in 2018, £1.9 billion less than in 2017
• Over the last 10 years the total rent bill has grown by £29.9 billion in Great Britain
• Nine out of 11 regions saw their total rent bill fall last year, but London saw the biggest drop of (-£0.62 billion)
• The rate of rental growth has slowed over the last 12 months in Great Britain. In January the average cost of a new let rose 0.6% year-on-year compared with 2.4% in January 2018

Last year private tenants in Great Britain paid £59.1 billion on rent, £1.9 billion less than in 2017. This is the first annual fall in over 10 years (table 1). The fall has been driven by a drop in the number of households renting and rental growth stagnating.

Table 1: Total rent paid in Great Britain (£billions rounded)

However, over the last 10 years the total rent bill has increased by £29.9 billion in Great Britain. During this period the number of households privately renting has grown by 1.7 million (+52%), meanwhile rents have increased by 12.4%.

One-year change 

Nine out of 11 regions in Great Britain saw a fall in their total rent bill over the last year; the only regions to see a rise were the East Midlands (£0.13 billion) and the North East (£0.06 billion). London saw the biggest drop off in the total amount of rent paid by tenants., totallying £20.6 billion in 2018, £0.62 billion less than in 2017 (table 2).

Table 2: Total rent paid by region (£billion)

Ten-year change 

Over the last 10 years the rental bill increased in every region with the biggest rise in the amount of rent paid by tenants being in the capital where the total rental bill grew by £10.53 billion over the 10-year period. After London, tenants in the South East (£14.19 billion) and the East (£3.05 billion) saw their rental bills rise the most. Meanwhile Wales saw the smallest rise in the total amount of rent paid by tenants over the last decade, up £0.07 billion (table 2).

Rental growth 

The rate of rental growth has slowed over the last 12 months in Great Britain. In January the average cost of a new let rose 0.6% year-on-year compared with 2.4% in January last year (table 3). London led the slowdown over the last year, but rents have gradually started to rise again. The average cost of a new let in the capital rose 0.6% year-on-year in January. Meanwhile the South East and South West both recorded rents falling -0.5% year-on-year (table 3).

Table 3: New Lets Year on Year by Region

Commenting Aneisha Beveridge, Head of Research at Hamptons International, said: 

“The total amount of rent paid by tenants in Great Britain fell for the first time in over a decade last year. Despite average rents rising 0.4% in 2018, fewer people renting homes meant the total rent bill shrank by £1.9 billion since 2017. 

“Over the last 12 months rental growth in Great Britain has slowed. Rental growth has fallen from 2.4% in January 2018 to 0.6% last month. The slowdown over the last year was mainly driven by London, but rents are now gradually starting to rise again in the capital. Meanwhile the South East and South West both recorded falling rents last month.” 

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8 February 2019

Landlords are migrating north to increase rental yields following new tax laws

Landlord purchases fall by £5.2 billion in 3 years

In adapting to a new tax environment – landlords are buying fewer properties and spending less too.

The total value of homes bought by landlords has fallen considerably over the last few years. In H1 2018 landlords spent £12.1 billion purchasing rental properties, £5.2 billion – or 30% less – than in H1 2015, when the figure reached £17.3 billion in Great Britain.

As a result, the total value of homes purchased by landlords has reached the lowest level in five years, having peaked in H1 2016 at £21.2 billion, when second homeowners rushed to beat the 3% stamp duty surcharge which was introduced in April 2016. In London, landlords spent £3.5 billion purchasing rental homes in H1 2018, 40% less than in H1 2015 and 22% less than H1 2017 (table 1).

Table 1: Total value of homes purchased by landlords in Great Britain & London

The fall in the total value of landlord purchases has mainly been caused by the fall in the number of investors purchasing buy-to-let properties. But it’s also a consequence of landlords adapting to their new tax environment, and spending less on the properties they do buy, as they increasingly head further North. In H1 2018 landlords purchased 64,260 homes in Great Britain, down 13% year-on-year and 31% less than in H1 2015.

However, the average price of a home bought by a landlord fell to £174,580 this year – 7% less than in 2016 – despite average house prices rising over that period. This fall has been additionally fuelled by more landlords purchasing cheaper buy-to-let homes further North, in search of lower stamp duty bills and higher yields (table 2).

Table 2: Proportion of London Landlords purchasing properties elsewhere in the UK

This is 10% more than last year and over double the proportion in 2012. As a result, the average landlord based in London spends a quarter less on their buy-to-let property than they did in 2016.

This just goes to show that even though the taxation clampdown on landlords introduced in 2016 resulted in fewer landlord purchases, many landlords appear to be adapting their investment strategy to the new environments quite well.

To discuss rental yields and opportunities in York, please contact one of investment experts today on 01904 652729.