In a noticeable shift, the pace of rental growth in Britain took a step back during the month of May, as revealed by leading lettings agency Hamptons. The average rent on newly let properties in the country rose by 9.1% year-on-year, down from April’s figure of 11.1%. With the exception of the South West, rental growth experienced a slowdown across all regions.
London, known for its soaring rents, witnessed the most significant deceleration. The average cost of a freshly rented property in the capital climbed by 13.3% YoY in May, marking a decline from the record high of 17.2% seen in April. Notably, Inner London continued to exhibit robust growth, bucking the overall trend.
Scotland emerged as the sole region to achieve double-digit rental growth last month. While rent hikes are capped for existing tenancies, the open-market segment, involving new tenant moves, continued to witness rapid increases, surging by 11.6% YoY.
Hamptons’ Head of Research, Aneisha Beveridge, offered a positive outlook for tenants, stating, “The good news for tenants is that rental growth is starting to cool, and we expect that to continue throughout the remainder of the year.” Over the past decade, average rents in Britain have risen by 47%, a figure that lags behind the 69% growth observed in house prices during the same period. However, Beveridge pointed out a concerning trend: “Over half of that rental growth has occurred within the last four years. And this has come at a time when household incomes are under pressure from other rising costs.”
It is worth noting that landlords also face similar pressures, a factor that has contributed to the rental growth observed this year.