Tuesday, 17 June 2008

UK rent inflation

Despite whatever you might have read in the property pages of leading newspapers, rental inflation remains subdued. Actually, it edged down 0.1 percent in May to 3.4 percent; only a fraction higher than the CPI inflation rate and almost a full percent lower than the RPI rate.

Today's numbers only go to prove that the buy-to-let bubble has done wonders for renters throughout the UK. When compared to retail prices and average earnings growth, rents have grown at a slower rate over the last ten years.

Unfortunately, the good times could be coming to an end. The credit crunch threatens to scare off would-be amateur buy-to-let landlords. Renters need these jokers to keep coming into the market, since they maintain an ready supply of rented accomodation.

Thankfully, it hasn't happened yet. Despite the credit crunch during the first quarter of 2008, lenders handed out around 49,000 new BTL loans. This should keep rents lower for the foreseeable future.

6 comments:

VADO said...

It is definitely a good time to be renting.....

Seema said...

Should renters be looking for reductions?

traderboy said...

i have been renting for a long time and have moved a LOT over the years (all in london)...I am TELLING you that rents are without doubt DECREASING...last year supply seemed a little tight, this year there is a ton of property on the market, at lower prices, and you can negotiate down much further than the last couple of years. Also I know my last flat is going to be rented out at nearly 10% less than last year.

I have also seen a number of properties on the market for sale and rent, but the ones I've enquired on have all been getting rented as they just aren't sellable in today's market. A lot of BTL'ers are going to be in trouble when their mortgages reset at 7%+ and rental yields are still around 5% or even lower.

CWS said...

It is a pity the BTL thing couldn't keep going.

monoi said...

There has to be a link between property prices and rent levels.

So if the former is going south, the latter cannot be far behind...

Anonymous said...

Monoi, the link is incomes to rent.

Nick