PEARL Rental Index – March 2018

PEARL Rental Index – March 2018

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PEARL Rental Index: March 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 1.1% in the 12 months to February 2017
  • London rental price growth continuing to decline, with the latest rental index showing rents have increased by 0.1% in the 12 months to February 2017
  • Consumer Price Index inflation now at 2.7%, down from 3% for January 2018

[/et_pb_text][et_pb_text admin_label=”Index of Private Housing Rental Prices (IPHRP)” _builder_version=”3.0.94″ background_layout=”light”]

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 1.1% in the 12 months to February 2017. This figure has remained flat compared to the previous month but it 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 February 2017:

  • England rental prices grew by 1.1%
  • Wales rental prices grew by 1.4%
  • Scotland rental prices grew by 0.4%
  • London rental prices grew by 0.1%

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. Wales rental growth has remained flat at 1.4%, the same as the previous month, but rental price growth is stronger in Wales the constituent countries of the UK.

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 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 February 2017 were:

  • East Midland rental prices grew by 2.5%
  • East of England rental prices grew by 2.1%
  • South West rental prices grew by 2.1%

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

  • North East with rental growth of 0.0%
  • London with rental growth of 0.1%
  • North West with rental growth of 1.3%

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Consumer Prices Index (CPI)

The Consumer Prices Index 12-month rate was at 2.7% for February 2017. This was down from 3% in January 2018. In comparison to rental growth and the IPHRP rental index for Great Britain, inflation was 1.6 percentage points higher than private rental growth.

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Average Weekly Earnings

In the year to January 2018, Average Weekly Earnings (AWE) Regular Pay increased by 2.8%, with average weekly earnings now at £482.

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House Price Index

In the year to January 2018 , average house prices in the UK increased by 4.9%, 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%, and has now stabilised at around 5% throughout 2017.

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

  • England house prices grew by 4.6%, with the average house price now at £242,286
  • Wales house prices grew by 4.5%, with the average house price now at £153,034
  • Scotland house prices grew by 7.3%, with the average house prices now at £148,512
  • Northern Ireland prices grew by 4.3%, with the average house prices now at £130,482


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

  • East Midlands (7.3%)
  • South West (6.9%)
  • East of England (5.3%)
  • West Midlands (5.3%)

The weakest house price growth was in:

  • North East (0.7%)
  • London (2.1%)
  • South East (3.4%)
The region with the highest average house value for January 2018 was London at £485,830, followed by the South East at £323,435, and then the East of England at £289,729. The region with the lowest average house value for January 2018 was the North East at £122,870.

The property type that has experienced the greatest price growth was Semi-detached properties at 5.8% for the year to January 2018, with the average house price at £212,833. The property type with the weakest price growth was Flat or maisonette at 4.0% for the year to January 2018, with the average price at £203,840.

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 13% in November 2017 in comparison to the previous year. For the whole of the UK, the number of property transactions completed fell by 11% for November 2017 in comparison to November 2016, in comparison to the previous month (October 2017), the number of property transactions fell by 6%.

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Buy-to-Let Mortgage Activity

Buy-to-let lending in January 2018 declined 5.1% for new purchases year-on-year. The number of new buy-to-let loans has remained relatively unchanged since October 2016, with lending hovering between 5000 and 6500 loans per month. Remortgaging is currently driving buy-to-let lending activity, with 16,500 remortgages in January 2018, this is 17.9 percent up year-on-year. Overall, this shows that the number of buy-to-let mortgages for new house purchases has not recovered from the Stamp Duty changes, and are well below the figure for May 2013 (at 6,900).

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PRS Evidence Dashboard Update

In January 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.

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Updates from across the sector

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Royal Institution of Chartered Surveyors

The latest RICS UK Residential Market Survey for February 2018 indicates that the number of new buyer enquiries fall for the eleventh month in a row, the average stock on an estate agents’ books hits a record low, however rental price growth is expected to hit 15% over the next five years.

Simon Rubinsohn, RICS Chief Economist, commented:

“The consultation announced earlier this week on housing delivery put the onus squarely on developers and planning departments to up their game to lift the supply pipeline, but the feedback to the latest RICS Residential Market Survey casts some doubt as to whether this will be sufficient to address the challenge.

“Significantly, the longer term national house price indicator has begun to creep upwards once again in recent months despite the current somewhat mixed climate and the private rent series also remains firm, in both cases pointing to increases of at least fifteen percent over the next five years.

“Meanwhile, the divergent regional picture is becoming increasingly pronounced with key RICS indicators across huge swathes of the country still showing considerable resilience but data for London, the South East, and East Anglia rather more subdued.”

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ARLA PropertyMark

The latest ARLA UK Private Rented Sector Report for February 2018 found that the number of rental homes available for tenants fell in February but at the same time demand from prospective tenants also dropped. The number of rental homes being managed by an agent fell by 5% in comparison to the previous month, while tenant demand fell by 13% in comparison to January. For rents, one in five tenants experienced increases to their rent, up one percentage point in comparison to January.

David Cox, Chief Executive, commented:

“This month’s results continue to show a drop in the supply of rental properties and this is no surprise; the minimum energy efficiency standards come into effect in April meaning all rental properties must be EPC rated E or above.

“The dip in supply indicates that landlords are cutting it fine and taking their properties off the market to make the necessary changes before the deadline – but we could also see up to 300,000 properties taken off after the deadline passes on Sunday because they don’t reach the minimum requirements. This is also likely to push rent costs up as competition heats up among prospective tenants. We could have a supply crisis on our hands and for landlords who haven’t yet started to upgrade their properties, now is the time to act and fast.”

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Countrywide Letting Index

The October 2017 index from Countrywide is showing that rental prices in October grew by 0.5%, much lower than the figures from the ONS in the Index of Private Housing Rental Prices. However, if you exclude London, where Countrywide reported negative growth, rental prices increased by 1.2% across Great Britain. An interesting finding from this index is that the number of cash buyers is increasing, with 78% of PRS homes bought in the North East bought with cash.

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UK Finance

Commenting on the data from UK Finance, Paul Smee, Head of Mortgages at UK Finance said:

“Declines in buy-to-let lending reflect the changing regulatory and fiscal environment for landlord businesses, where some landlords might be inclined to reappraise the viability of their portfolios.”

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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.”

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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.”


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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%).

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Comment from the RLA

Alan Ward Chairman of the RLA commented on the findings of this month’s RLA PEARL Statistics Bulletin:

“The government’s fiscal policy is a housing own-goal. It has not only turned off landlords, it has turned off house-builders from investing. Housing sales are down 17% year on year, new supply of properties is down, and buy-to-let mortgage activity continues to be flat. All of this is bad news and we need direct action by the Government in next week’s budget to encourage the supply of homes for families to rent and buy.”


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.