Private rents have remained stable during the coronavirus pandemic but started to fall across parts of the UK during June according to a leading property firm.
Property management firm, apropos, has analysed the latest official data from the Index of Private Housing Rental Prices (IPHRP) which shows that the 12 month price change for the UK is at 1.5% in June and has been at that figure since April and before that it was lower at 1.4% in February and March.
The figure for England is 1.5%; in Wales 1.4%; in Scotland 0.6%; and in Northern Ireland 2.6%.
Between February and May rent growth in every English region were either static or even continued to increase. In the West Midlands, for example, the 12-month price change was 1.5% in February and rose to 2.2% by May.
However, this situation changed in June and in Yorkshire and the Humber the 12-month price change fell from 2.2% to 2.1%; in the East Midlands from 2.5% to 2.3%; in the West Midlands from 2.2% to 2.1%; in the East of England from 1.7% to 1.6%; and in the South East from 1.2% to 1.1%.
All but four regions experienced falling 12 month rent price change percentages with London, the North West, and the South West remaining stable at 1.2%, 1.0%, and 2.5% respectively and the North East actually seeing an increase in the 12 month price change from 0.8% in May to 1.0% in June.
David Alexander, joint managing director of apropos, commented: “Rents have held up well throughout the early part of the pandemic as most people wanted or needed to stay where they were rather than think about moving during such a difficult period. The slight fall in 12-month rental change across five English regions, although relatively small, may be indicative of the first shifts in sentiment and a potential consequent dip in demand following easing of the lockdown. This could increase if individuals become unemployed as the furlough scheme comes to an end.”
“If unemployment does start to rise then this will undoubtedly have an impact on rent prices. There is a strong degree of uncertainty at the moment with a mixed picture emerging of how the economy might perform.”
David continued: “On the positive side the latest retail figures show a higher than expected bounce back as did the latest data from the purchasing services managers index. ARLA Propertymark recently issued a survey showing almost a third of agents reported landlords increasing rents in June and the Nationwide has reported a 1.7% rise in house prices during July. Equally there remains concern about continued investment and growth in the coming months and the success of government policy in keeping the economy moving.”
“For landlords and property investors this remains a challenging time. There may be issues with rent price drops in the short term and owners need to ensure they are prepared for any financial fluctuations in the future. Meanwhile, the Stamp Duty Land Tax (SDLT) holiday is encouraging many existing and new landlords to invest in the private rented sector (PRS). All markets require confidence to grow and it is clear that the SDLT cut has provided a boost at a time when the property sector could have faltered.”
David concluded: “But I remain cautiously optimistic. While there may be price blips in the short term there is no doubt that property will always be a strong financial performer in the medium to long term. There may be hiccups along the way but in the end, property remains a sound investment now and in the future.”