Thursday 5 May 2016 12:01 am

Rising residential rents ease fears of a slowdown after buy-to-let buying frenzy

Rental prices rose in all but one region of the UK over three months to April, new figures show, despite concerns about the impact of higher stamp duty charges. 

Insurer HomeLet's latest rental index reveals that rents outside of London were, on average, 5.1 per cent higher over the three months to April than in the same period of last year.

That compares with a 4.9 per cent in March, with rent rises having remained within the same narrow band since the beginning of the year, HomeLet said. 

In London, rents on new tenancies signed over the last three months were 7.7 per cent higher than a year ago, reflecting the third month in a row that rents have risen. 

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The data comes just a few weeks after the government raised the stamp duty levy for second home buyers and buy-to-let landlords by three per cent, prompting a flurry of deals ahead of the April deadline.

The rush to beat the stamp duty increase has also led to speculation that there might be a sudden increase in the supply of rental property, leading to more subdued increases in rents. However, HomeLet said its figures suggest that so far, this yet to happen. 

“It may be that over the next several months, the trends observed in the rental market begin to reflect the signs of some slowdown in the rate of house price growth that we are now beginning to see and that will be something to watch closely," Martin Totty, chief executive of HomeLet's parent company Barbon Insurance, said.

"But more broadly, there has been very little to alter the fundamental relationship between demand and supply, especially in those parts of the country where demand-side pressure is greatest."