London rents rise for first time in two years as UK growth slows

Recent research showed owning property cheaper than renting in all parts of the UK

Rental costs rose in 25 out of 33 boroughs in the capital in the last six months (REUTERS)

Rent in London rose for the first time in nearly two years in June, increasing by 0.1 per cent to an average of £1,884 per month, according to the latest Landbay Rental Index.

The figures show overall UK rental growth is continuing to slow down. Rents rose by 0.4 per cent in the first six months of the year, and went up by 0.54 per cent excluding the capital.

Rental growth has been strongest in the East Midlands and the east of England so far this year, with increases of 0.95 per cent and 0.7 per cent respectively, while rents in the North East dragged the average down with a 0.08 per cent drop.

Meanwhile, Wales has seen rents rise 0.9 per cent since the beginning of 2018, while Northern Ireland recorded 0.72 per cent growth.

In the capital, the index shows rents have gone up in 25 out of the 33 boroughs over the last six months.

John Goodall, CEO of Landbay, said: “A rebound of London rents would suggest that demand has returned to the capital. With a lack of suitable homes to rent, Londoners are therefore faced with an unsustainable cost when it comes to renting.

“That is why we need to shine a light on investment in house building of rental properties in the capital so it doesn’t return to the levels of rental growth we were seeing a couple of years ago.”

He added: “At a national perspective, despite rental growth slowing, rents continue to climb. Tenants should welcome the marginal slowdown as with a rate rise on the horizon, meaning a rise in the cost of borrowing for landlords, rents are inevitably going to go up in the coming months.”

Research published last month showed that owning a home is now cheaper than renting in every part of the UK, with monthly mortgage payments much lower than rent. For example, in London homeowners save an average of £289 per month, adding up to annual savings of £3,500.

The monthly savings are becoming increasingly inaccessible however as the size of the average deposit has risen to more than £51,000 for first-time buyers.