PEARL Rental Index – May 2018

PEARL Rental Index – May 2018

[et_pb_section bb_built=”1″ fullwidth=”on” _builder_version=”3.0.94″ custom_padding=”0px|0px|2px|0px” background_image=”” next_background_color=”#ffffff”][et_pb_fullwidth_post_title comments=”off” featured_placement=”background” text_orientation=”center” text_color=”light” text_background=”on” text_bg_color=”rgba(158,158,158,0.9)” _builder_version=”3.0.94″ title=”on” meta=”on” author=”on” date=”on” categories=”on” featured_image=”off” parallax_effect=”on” parallax_method=”on” border_style=”solid” parallax=”on” background_position=”top_left” background_repeat=”repeat” background_size=”initial” /][/et_pb_section][et_pb_section bb_built=”1″ admin_label=”section” _builder_version=”3.0.47″ prev_background_color=”#000000″][et_pb_row admin_label=”row” _builder_version=”3.0.47″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_padding=”0px|0px|18.95px|0px”][et_pb_column type=”4_4″][et_pb_text admin_label=”Headline Findings + Introduction ” _builder_version=”3.2″]

PEARL Rental Index: May 2018

We have rounded up all of the latest housing statistics, rental index updates and data on renting from across the sector and compiled them into one easy to digest bulletin.

Headline findings:

  • Rental price growth weakening for Great Britain, with the latest rental index showing rents had increased by 1.0% in the 12 months to April 2018, down from 1.1% in March 2018
  • London rental price growth continuing to decline, with the latest rental index showing rents were unchanged, with a of 0.0% in the 12 months to April 2018
  • Consumer Price Index inflation now at 2.4%, down from 3% for January 2018
  • Review of Industry data and Index’s show that Government taxation and regulatory changes are dampening the growth of the Private Rented Sector

[/et_pb_text][et_pb_text admin_label=”Index of Private Housing Rental Prices (IPHRP)” _builder_version=”3.2″ disabled=”off” disabled_on=”off|off|off”]

Index of Private Housing Rental Prices (IPHRP)

The latest Index of Private Housing Rental Prices (IPHRP) shows that private rents increased in Great Britain by 1.0% in the 12 months to April 2018. This figure has remained flat compared to the previous month but it is down from 1.8% for the year to August 2017.

Across Great Britain there were varying rental price changes in the 12-month rate to April 2018:

  • England rental prices grew by 1.0%
  • Wales rental prices grew by 1.3%
  • Scotland rental prices grew by 0.6%
  • London rental prices grew by 0.0%

The rental index shows that rental price growth for Great Britain, England and London are continuing to slow. This slow-down in private rental prices is being driven largely by the London Market. Rental price growth has been stronger in Wales than in the other constituent countries of the UK, with rental price growth of 1.3% in the 12-months to April 2018.

The London Market has experienced a significant slow-down in rental price growth over the past two years. In November 2015, rental prices were growing at 4.1%, it is now 4.1 percentage points below this figure. Furthermore, London rental growth is 1 percentage points below rental growth across Great Britain and is now 0.1 percentage points down from the previous month. It is likely that if the trend for London continues that rental growth will turn negative over the next few months.

At a regional level in England, the regions with the most substantial increase in rents to April 2018 were:

  • East Midland rental prices grew by 2.8%
  • South West rental prices grew by 2.1%
  • East of England rental prices grew by 1.8%

The regions with the lowest annual increases in rental prices were:

  • London with rental growth of 0.0%
  • North East with rental growth of 0.1%

[/et_pb_text][et_pb_text admin_label=”Consumer Prices Index (CPI)” _builder_version=”3.2″ disabled=”off” disabled_on=”off|off|off”]

Consumer Prices Index (CPI)

The Consumer Prices Index 12-month rate was at 2.4% for April 2018. This was down from 2.5% in March 2018. In comparison to rental growth and the IPHRP rental index for Great Britain, inflation was 1.4 percentage points higher than private rental growth.

[/et_pb_text][et_pb_text admin_label=”Average Weekly Earnings” _builder_version=”3.2″ disabled=”off” disabled_on=”off|off|off”]

Average Weekly Earnings

In the year to March 2018, Average Weekly Earnings (AWE) Regular Pay increased by 3.0%, with average weekly earnings now at £484.

[/et_pb_text][et_pb_text admin_label=”House Price Index” _builder_version=”3.2″ disabled=”off” disabled_on=”off|off|off”]

House Price Index

In the year to March 2018 , average house prices in the UK increased by 4.2%, down from 5.2% in the year to December 2017. UK house price growth has been slowing since June 2016, where it was 8.2%.

Growth in UK house prices was contributed mostly to growth in England. Across the UK, house price change for the year to March 2018 was the following:

  • England house prices grew by 4.0%, with the average house price now at £240,949
  • Wales house prices grew by 3.5%, with the average house price now at £152,999
  • Scotland house prices grew by 6.7%, with the average house prices now at £146,009
  • Northern Ireland prices grew by 4.2%, with the average house prices now at £130,026


In England, the strongest regional house price growth in the year to March 2018 were in:

  • East of England (5.8%)
  • East Midlands (5.6%)
  • North West (5.2%)

The weakest house price growth was in:

  • London (-0.7%)
  • North East (2.1%)
  • South East (3.3%)
The region with the highest average house value for March 2018 was London at £471,944, followed by the South East at £320,682, and then the East of England at £291,415. The region with the lowest average house value for March 2018 was the North East at £124,381.

The property type that has experienced the greatest price growth was Detached properties at 5.3% for the year to March 2018, with the average house price at £342,722. The property type with the weakest price growth was Flat or maisonette at 2.0% for the year to March 2018, with the average price at £200,157.

House Sales

The latest data from the HM Land Registry is showing that house sales have continued to decrease in comparison to the previous year. In England, house sales were down 12% in January 2018 in comparison to the previous year. For the whole of the UK, the number of property transactions completed fell by 12.9% for January 2018 in comparison to January 2017, in comparison to the previous month (December 2017), the number of property transactions fell by 39.4%.

[/et_pb_text][et_pb_text admin_label=”Buy-to-Let Mortgage Activity” _builder_version=”3.2″ disabled=”off” disabled_on=”off|off|off”]

Buy-to-Let Mortgage Activity

Buy-to-let lending in March 2018 declined 1.9% for new house purchases year-on-year, while remortgaging was down 12% year-on-year. For buy-to-let lending, the number of new loans has declined by 19% on the previous year. Remortgaging continues to drive buy-to-let lending activity with 12,600 remortgages in March 2018, 0.8 percent up year-on-year. The UK Finance data continues to show that buy-to-let mortgages for new house purchases has not recovered from the Stamp Duty changes, are well below the figure for May 2013 (at 6,900), and the governments taxation policy has dampened the market.

[/et_pb_text][et_pb_text admin_label=”PRS Evidence Dashboard Update” _builder_version=”3.2″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” disabled=”off” disabled_on=”off|off|off”]

PRS Evidence Dashboard Update

In May there were updates to the following data-sets and indices:

  • Index of Private Housing Rental Prices (IPHRP)
  • CPI
  • House Price Index
  • Average Weekly Earnings
  • Mortgage Activity (Value & Number of Buy-to-let mortgages)

You can find the updated statistics displayed on our PRS Evidence Dashboard here.

[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row _builder_version=”3.0.106″ disabled=”off” disabled_on=”off|off|off”][et_pb_column type=”4_4″][et_pb_text admin_label=”Updates from across the sector” _builder_version=”3.2″ background_layout=”light”]

Updates from across the sector

[/et_pb_text][et_pb_text admin_label=”Royal Institution of Chartered Surveyors” _builder_version=”3.2″ disabled=”off” disabled_on=”off|off|off”]

Royal Institution of Chartered Surveyors

The latest RICS UK Residential Market Survey for April 2018 shows that the number of new buyer enquiries remains stabile after a decline trend. Despite the current figure, which is the most negative since November 2012, almost one-third more of RICS respondents (31%) positively anticipate higher house prices next year this time. Stability shows also in sales where marginal positive gains were made by positive net balance of 8%. The new instructions declined but only by 7%, which kept the estate agents’ books constant and marginally better than the record low February.

Simon Rubinsohn, the RICS Chief Economist, observed:

“The housing market typically tends to see a pick-up in activity at around this time of the year and the feedback from respondents to the latest survey does seem to be capturing this tone. However, once this seasonal pattern has been allowed for the underlying trend in transactions still remains broadly flat.

“Meanwhile, the impact of recent tax changes appears increasingly visible in the letting results with new instructions from landlords in the three months to end April falling again and at a faster pace than previously. Given what this says about the Buy to Let market at the present time, it is imperative that Build to Rent begins to take on a greater role to ensure those seeking to rent in private sector over the coming years have sufficient choice.”

[/et_pb_text][et_pb_text admin_label=”ARLA” _builder_version=”3.2″ disabled=”off” disabled_on=”off|off|off”]

ARLA PropertyMark

The latest ARLA UK Private Rented Sector Report for March 2018 shows that the rental homes availability for tenants increased by 2% instead of the fall of the previous month. At the same time however the demand grew by 8%. For the estate agents, the number of properties managed increased by 2% compared to February fall but still being lower than in March 2017. Rental property demand also increased by 8% from 61 to 66 new house-hunters per branch. In the price front the upward trend continues where rent prices increased to 23% from February 20% figure. Still the price rises are lower in retrospect where rent rises in March 2016 and 2015 was 32%.

David Cox, Chief Executive of ARLA PropertyMark commented:

“This month’s results very much show a ‘business as usual’ period for the private rented sector, but this isn’t necessarily a good thing. Supply is still too low and almost a quarter of tenants are experiencing rent hikes every month as landlords try to recoup the costs lost trying to keep on top of all the recent legislative changes – including the recent energy efficiency deadline. For the last two decades, successive Governments have passed significant amounts of complex legislation for landlords, none of which have been properly policed or adequately enforced – but most of which cost decent landlords a lot of money.

“This is why we’re so supportive of the Government’s proposals to crack down on rogue agents, and more recently, plans to confiscate properties from criminal landlords. The announcements mark a sensible shift towards focusing on the root cause of the issues affecting the sector, rather than trying to find solutions to individual problems. This, coupled with greater rental stock is the key to fixing Britain’s broken rental sector.”

[/et_pb_text][et_pb_text admin_label=”Hamptons International Letting Index” _builder_version=”3.2″ disabled=”off” disabled_on=”off|off|off”]

Hamptons International Letting Index

The April 2018 index from Hamptons International is showing that since April 2016 when the stamp duty surcharge for second homeowners was introduced, the number of homes available to rent has fallen in the South, but stock levels have been more resilient in the North. Last month there were 19% more available homes to rent in the North than in April 2016, compared with -16% fewer homes available to rent in the South.

Since April 2016, landlords have sold 82,000 more homes than they bought in the South, compared to 24,000 net sales in the North. As a result, in April 2018 there were 5% fewer homes available to rent across Great Britain than in April 2016.

Commenting Aneisha Beveridge, Research Analyst at Hamptons International, said:

“Low stock levels in the South continue to drive rental growth as tenants compete for fewer available homes. Since April 2016, the month the stamp duty surcharge was introduced for second homeowners, landlords across Great Britain have sold 88,000 more homes than they bought. But landlords are finding new ways to maximise their returns by purchasing properties elsewhere, particularly further North in search of lower stamp duty bills and higher yields.”

[/et_pb_text][et_pb_text admin_label=”UK Finance” _builder_version=”3.2″ disabled=”off” disabled_on=”off|off|off”]

UK Finance

Commenting on the data from UK Finance, Jackie Bennett, Director of Mortgages at UK Finance said:

“Remortgaging levels softened in March, after a busier than usual start to the year saw customer locking into attractive deals ahead of a potential interest rate rise.

“There has been relatively flat growth in lending to first-time buyers, reflecting recent Bank of England figures showing a fall in mortgage approvals.

“Meanwhile the buy-to-let market remains subdued, as recent tax and regulatory changes continue to have an impact on demand.”

[/et_pb_text][et_pb_text admin_label=”Your Move ” _builder_version=”3.2″ disabled=”on” disabled_on=”on|on|on”]

Your Move – Buy-to-Let Index

The latest Buy-to-Let Index from Your-Move for February 2018 found that rents increased by 2.5% in the last year, with average rents to be at £829 per month. The strongest growth has previously been seen in southern areas, however, recently rents in the North West and East Midlands grew faster than anywhere else in the last year, with typical monthly rent in these regions 2.% higher than 12 months ago. Prices were found to have risen in eight out of the ten regions surveyed, London and the North East were the only regions to seel a fall.

Vicki Cullen, Area Lettings Manager, comments:

“Demand in Manchester and East Lancashire remains strong due to the easily accessible commuter and public transport links. The variety of local schools, makes the areas popular with families. In addition large businesses, including local hospitals and universities, also boost employment opportunities.”

“The most popular type of housing is either a 3-bed semi, or a modern 3 to 4 bed detached and those with gardens and garages are always in high demand. We are seeing tenants becomingly interested in the presentation of the house as they expect value for money and good quality homes to rent. A modern kitchen or bathroom will always make a property more appealing and consequently, easier to secure a tenant in a shorter timescale.”

[/et_pb_text][et_pb_text admin_label=”Right Move – Rental Price Tracker” _builder_version=”3.2″ disabled=”on” disabled_on=”on|on|on”]

Right Move – Rental Price Tracker

The Right Move Rental Price Tracker has found that asking rents for properties in the UK fell by 0.2% in Q1 of 2018 to an average of £775, however these rents are still 0.9% above the same quarter in 2016. In London, rents fell by 0.1%, while rents outside of London grew by 0.9%.

Rightmove’s Housing Market Analyst Miles Shipside comments:

“Although the growth in asking rents has slowed over the past few years, people looking for a bigger property could find that they need to look further out than their initial wish list of places, especially in the bigger cities around the country.”

“A look at the first few months of this year shows the usual seasonal trend of asking rents falling slightly compared to the last quarter of last year, but we’re likely to see a rise again next quarter. London asking rents remain flat compared to this time last year, a sign that we are highly unlikely to see the same big increases over the next 10 years that we’ve seen in some areas in the capital over the previous ten years.”


[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row _builder_version=”3.0.106″ background_repeat_1=”no-repeat” disabled=”off” disabled_on=”off|off|off”][et_pb_column type=”4_4″][et_pb_text admin_label=”RLA Research” _builder_version=”3.2″ disabled=”on” disabled_on=”on|on|on”]

Latest Research from the RLA

Our latest research is not showing a good outlook for the long-term future of the sector. The proportion of landlords who have sold properties in the past 12 months has continued to increase and is now up four percentage points in comparison to the previous year.

At the same time, the proportion of landlords who are planning to sell properties has increased by two percentage points to 22% of landlords.

The changes to Mortgage Interest Relief have been found to be negatively impacting on landlord finances, with 70% of landlords reporting the changes to MIR would reduce their profitability, with 62% saying the changes would reduce their profitability by at least 20%.

When asked how they would mitigate any negative impact of the changes, most landlords reported they were planning on increasing rents (67%), followed by selling properties to reduce the size of their mortgages (25%) or leaving the sector as a landlord (25%).

[/et_pb_text][et_pb_text admin_label=”Comment from RLA” _builder_version=”3.2″ disabled=”off” disabled_on=”off|off|off”]

Analysis and comment from the RLA

Dr Tom Simcock, Senior Researcher of the RLA commented on the findings of this month’s RLA PEARL Rental Index:

“The latest data and comment from across the sector is showing that the government’s tax and regulatory changes are dampening the growth of the Private Rented Sector. Buy-to-let lending is down on the previous year and RICS reporting new instructions declining. If the sector is to meet the demand for an additional 2 million properties by 2025 as predicted by PwC, then positive changes by the Government will be needed to support landlords. But, the overall housing market is subdued, with house sales down by 39% in comparison to the previous month and new house purchases down by 1.9% year-on-year.

“However, there is good news for tenants, with average weekly earnings increasing a lot faster than rents across Great Britain. In the short-term this will provide relief over past stagnant wage growth and if this continues in the long-term will support renters to save more for deposits.”


Dr Tom Simcock

Until February 2019 Tom was the Senior Researcher for the RLA. His expertise lies in researching change in society, public policy and quantitative and qualitative research methodologies. Tom’s research on housing has received national media coverage, featuring on the front page of The Times, has influenced government policy making, and has been cited in debates in the House of Commons, House of Lords and by the London Mayor. Tom now works for Edge Hill University.