As a nation struggling with a ballooning housing crisis, there have been a steady stream of mounting issues that have reportedly exacerbated the situation, with the recent stamp duty increase, a lack of supply of homes being built fast enough against the pressure for demand, and house prices generally increasing on a yearly basis. However, in the rental market, which itself had been on a steady rise over the past decade, it has been noted that rent in Britain, particularly in London, has dropped by nearly 5% as monthly rental costs in the country since 2010, as a recent article pointed out on the Evening Standard website.
Figures gathered by Countrywide’s Letting Index record that rental costs have dropped by an average of £63 compared to February of last year, from £1,309 to £1,246 in the capital. This was helped by the rush of buy-to-let investors and landlords snapping up properties before the increase of the stamp duty hike, which has but nearly killed off the buy-to-let sector as mentioned in previous articles, but this was also added with the decrease in the number of tenants searching for homes, giving renters more room to negotiate renting rates – particularly in the Greater London and South-East London areas. However, rent is still noted as being 30% higher in these regions that 10 years ago, and this has come at a time when wages in Britain has only increased by 18% in the same amount of time.
Johnny Morris, research director at Countrywide, commented on the situation: ”Early signs point towards 2017 being a rare year where rents rise faster in the north of the country than in the south.” The north-south divide will show that there are still areas of Britain that are more affordable, but we will still have to wait and see what the pattern will be for the rest of the year. Mr Morris continues: ”While rents are likely to track any increase in earnings, affordability in London and the South East remains stretched. That is likely to limit rental growth,” reaffirming proof that London and other areas in the South East are still the most expensive areas to live in.
As the capital is one of the most popular and recognized places to live, rental and property prices will always be a cut above the rest in terms of affordability and burden on household incomes, but this change in the rental market shows the volatility in the housing market. However, the rest of the UK has seen an increase of nearly 3% in rents, especially in the East, East Midlands and North-West regions. The instability in the property market induces a fear in future buyers, who enter a market with unknown uncertainties and troubling times ahead.