LONDON – UK rental prices fell for the first time in eight years in May, according to the latest HomeLet Rental Index.
It found that the average monthly cost of a new tenancy fell to £901 in May, down 0.3% from £904 in the same month last year.
It is the first time since December 2009 that HomeLet’s rental index has measured an annualised fall in rent prices. The pace of rental price inflation had slowed rapidly in previous months after peaking at 4.7% last summer.
New tenancies on rents in London (including Greater London) were 3% lower than this time last year, down to £1,502 from £1,519.
Individual month-on-month indexes are subject to volatility, but the slowdown in the rental sector mirrors stagnant price growth elsewhere in the housing market.
Nationwide reported a three-month consecutive fall in house prices between March and May.
HomeLet’s chief executive Martin Totty said rental prices were being constrained by a lack of real wage growth.
He said: “Rental data suggests landlords are now facing a difficult balancing act between ensuring rents are affordable for tenants in a low real wage growth environment whilst covering their own rising costs.
He added: “Tenants will still need a vibrant and growing rented sector to provide them with property options at the time of their choosing.
“Any constraint to the supply of rental properties, because landlords are unable to achieve the reasonable returns they require, cannot be in the long-term best interests of tenants, especially if, as we’ve now heard from all the main political parties, the UK’s population continues to grow.”