The annual rate of rental growth across Britain doubled between June and July driven by a turnaround in the London market, according to data from Countrywide.
The agency’s monthly lettings index, published this morning, shows how the run of eight consecutive months of falling rents in London came to an abrupt end in July.
Rents in the capital ended the month 2.1 per cent up on last year as the number of properties available to rent fell sharply. Meanwhile across Britain the rate of rental growth doubled from 1.1 per cent in June to 2.2 per cent in July.
Three of the four English regions where rents rose fastest were the South West, East of England and Greater London. Outside these areas, Scotland saw the fastest rental growth at three per cent.
Across Great Britain, the number of homes to rent grew four per cent year-on-year but the rate of growth slowed in each of the last 10 months.
In London, the East of England and the South East there were fewer homes on the market than in July 2016.
The steady fall in the number of homes available to rent in London has been driven by a drop in the number of landlords buying since the new stamp duty rates. July saw the proportion of London homes bought by a landlord fall to the lowest level for seven years.
However, the drop in the number of homes to rent in London has not been matched by a fall in tenant numbers - the volume of would-be tenants in the capital was largely unchanged on last year, meaning the same number of people were chasing fewer homes. Outside London the number of tenants registering was down five per cent on last year.
“The rush to beat higher stamp duty rates in April 2016 caused a spike in the number of homes to rent but that has now worked its way through the market. The stock of homes to rent is now falling in the more expensive parts of the country because higher tax rates have dissuaded large numbers of landlords from buying. Ultimately this means fewer homes on the market and higher rents” says Countrywide research director Johnny Morris.
“Across the Midlands and the North, higher rates of stamp duty are much less of a disincentive to investors. Here the number of homes on the market remains up on last year, buoyed by investors living in London and the South East choosing to buy in the Midlands and the North” he adds.