Rent rises slowing as more tenants chase every property

Every region of the UK experienced smaller rent increases in August than in previous months, a new report shows.

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The average monthly rent in the UK, excluding London, is now £729, according to the HomeLet survey. In London, the figure is £1,464.

Only London (2.4 per cent) and the South East (three per cent) saw increases above two per cent, while those in East Anglia were up just one per cent, and in the South West were down by 0.9 per cent.

The biggest drop in rental prices was in the North-West of England where rents paid for new tenancies in August were on average, 3.5 per cent lower than  in July.

"August can traditionally be a slower month for the rental market and similar dips have been seen in rental prices in previous years," said Martin Totty, Barbon Insurance Group’s Chief Executive Officer. "Nevertheless, the cooling in the rental sector may prove to represent the beginning of a trend towards a more settled market after several months of much more significant growth. A similar cooling has been seen in the wider housing market, with house price indices recording an easing of house price growth."

According to Countrywide Residential Lettings, there are now five tenants chasing each rental property, up from four a year ago.

Its figures show that 15 per cent of properties were let for more than advertised in August, the highest level for 13 months. The length of the average tenancy is now just over 16 months.

"The significant level of mobility between the sale and rental markets means changes to the level of demand in the sales market will have a knock on effect in the rental market," said Nick Dunning, Group Commercial Director. "With over half of those using the Help to Buy scheme coming from the private rented sector, and the large rise in the number of first time buyers over the last year, rental growth has been subdued.

"The gradual cooling of the sales market over the past months means we have begun to see upward pressure on rents, driven by a rise in demand from tenants with fewer leaving the sector. An increasing number of landlords have been able to re-let their property at a higher rate with tenants willing to meet and in some cases surpass rising asking prices."