The speedy rise in rents seems to be stabilising, with the annual enhance in rents standing at 6.3% in May, broadly in step with the earlier three months.
These figures from Hamptons present {that a} newly-let residence now prices a mean of £1,337 per thirty days — a £79 pcm enhance when in comparison with the identical month final yr.
However the figures present rental progress for tenants renewing their contracts is rising at a sooner charge – with common renewal rents up 8.8% year-on-year in May, from 8.3% in April.
Hamptons says the slowdown in rental progress for newly-let properties has been led by London, the place the tempo of annual progress fell to three.9% in May, the bottom charge since November 2021.
Its evaluation additionally calls into questions the viability of the proposed Mortgage Guarantee Scheme, saying the figures present that renting stays cheaper than shopping for with a 5% deposit.
Hamptons says that would-be purchaser with a 5% deposit face paying £300 per thirty days extra in mortgage repayments than in the event that they continued renting, at present mortgage charges and home costs. It says the mortgage charge would want to fall from 6.1% to round 4.2% to make the month-to-month value of renting and shopping for within the UK comparable.
Looking at its regional knowledge on rents, it says the excessive value of mortgages at current imply that purchasing with a 5% deposit doesn’t work financially in most locations south of Birmingham. In London, servicing a mortgage would value the common tenant an additional £775 per thirty days, which equates to £9,300 a yr.
Hamptons provides that the variety of completions backed by the present mortgage assure scheme is working at 15% of the extent Help to Buy achieved.
Hamptons head of analysis Aneisha Beveridge says: “Despite rental progress setting at round 6% year-on-year, renting stays cheaper than shopping for for many households throughout the nation.
“High mortgage charges have squeezed consumers with small deposits out of the market, forcing extra households to lease for longer.
“Both the Labour and Conservative Parties have included mortgage assure schemes of their manifestos to spice up the supply of 95% loan-to-value offers. However, their effectiveness will in all probability be decided by Threadneedle Street moderately than Downing Street. The extent to which the Bank of England reduces charges will form the numbers of would-be consumers with small deposits greater than the best-designed authorities coverage.
