The prospect of today’s General Election as well as ongoing uncertainty surrounding Britain’s exit from the European Union is having a negative effect on tenant demand.
The latest Landbay Rental Index shows that average UK rents grew by 0.02% last month – the slowest pace of growth for over five years.
Figures show that London is leading the slowdown with annual growth in the year to May coming in at -0.94%.
Landbay says that rents in the capital have now fallen for 12 consecutive months thanks to dampened demand and heightened supply.
According to the Index, London was the only UK region to see rents fall in May, but seven out of 12 regions ended the month with a slower rate of growth than seen in April.
Across the rest of the UK, growth in the year to May was 1.62%.
Last month, the best year-on-year and monthly figures were recorded in Scotland at 1.27% and 0.11% respectively.
“The election is one of many external factors influencing activity in the buy-to-let market at the moment,” says Landbay founder and chief executive, John Goodall.
“Yes, uncertainty about the future of the UK will cause some people to delay a decision to move, but affordability pressures are also starting to pinch the pockets of renters across the country.”
“Wage growth is now lagging behind inflation for the first time since mid-2014, and with less money to spend on such a major monthly outlay, renters will be factoring this into their tenancy decisions,” he adds.
“On the supply side, a wave of new rental properties caused by last spring’s hike to Stamp Duty, together with falling house prices, will no doubt both be playing a small part in the ongoing softening of rental growth.”
Goodall says that barring a ‘major surprise’ in today’s election or ongoing Brexit negotiations, long-term population and constructions trends suggest that average rents will soon be growing faster than inflation once more.
Earlier this week, HomeLet reported that average rents fell for the first time in eight years during May.