Greater London rents rose at their slowest rate in almost two years in January, according to research released today by HomeLet, suggesting that prices in the capital may have reached their peak.
The insurance provider’s latest rental index reveals that prices rose by 6.2 per cent in the three months to January compared to the same period last year, which is the slowest rate of growth in Greater London since March 2014.
Elsewhere in the UK rents continued to rise steadily, with the south east and the east midlands reporting the biggest increases at 7.2 per cent and 6.8 per cent respectively.
The average UK rent on new tenancies is now £740 per month when excluding Greater London, up 5.5 per cent over the three months to January. But despite the slowdown, rents on new tenancies in London are still more than twice the average for the rest of the UK at £1,510 per month.
Martin Totty, chief executive of Homelet’s parent company Barbon Insurance Group, said the slowdown may be sign that price have reached the peak of what renters are willing pay or able to afford after a rising at a rapid rate last year.
“It’s notable that there has been a further fall in the rate at which average rents in the Greater London area are rising. In recent years, the capital has seen much faster rates of increase than the rest of the country, but it may be that an affordability ceiling has now been reached in London and that rents will now track other parts of the UK more closely,” he said.
“The fact that UK-wide average rents in the private rented sector continue to show sustained upwards growth reflects there is still strong demand for rental properties, driven mainly by the impact of the long term structural imbalance in supply and demand of property,” Totty added.