To cover additional costs?
Rental averages have increased over the last 12 months to April 2016, which is a likely sign of rising costs for landlords being passed on to tenants. The removal of the wear & tear allowance, the planned change to taxation on mortgage interest from 2017, as well as the 3% stamp duty surcharge, all play a part. Have you increased your rent to cover costs?
Average rents across the UK
According to new tenancies by HomeLet in the 3 months to April 2016, the average rent outside London increased by over 5% in the 12 months to April 2016, rising to over 7.5% in the capital.
At the end of April 2016, rent outside London averaged at £755 per month, whilst within Greater London the average was more than double this figure, at £1,543.
Scotland showed the biggest increase in rent averages, up over 11% year-on-year, with rent now costing the tenant over £700 per month. The East Midlands also showed a jump to almost £650 per month, with an increased cost of renting up almost 8% since 2015.
“Landlords could be feeling the squeeze, after taxation changes, with changes to the wear and tear allowance landlords can claim, coming alongside the stamp duty surcharge.”
Martin Totty, HomeLet
The North East was one area in the country where average rents were down, by 1% from last year.
The Office for National Statistics (ONS) also reported that in the 12 months to March 2016, rents in Great Britain rose by 2.6%. This captures what is happening to rents on existing tenancies as well as newly agreed lets.
Demand for rental is still high
It will be a matter of time to see whether landlords decide to pass on higher costs, related to the various taxation changes, to their tenants. Only 1 month has passed with the new stamp duty surcharge, so it is too early to analyse trends.
However, there hasn’t been anything significant to alter the relationship between demand and supply for rental. Largely, first time buyers are still struggling to raise deposits to get onto the property ladder, and particularly in London, the desire for flexibility appears greater than the desire for home ownership, in many cases.
Overall, demand for rental is still high and there is no doubt that the taxation changes from 2017 will have an effect on landlords that are higher-rate tax payers.