London rents fall for the first time in six years – but only on new lets

Countrywide says buy-to-let rush before stamp duty hike saw the capital's rental supply rise by a third.

Rents in London fell for the first time in six years thanks to a flood of supply from buy-to-let investors, according to Countrywide, the UK's largest stable of estate agents. But this was only for new lets, as renewed tenancy contracts continued to see a soar in rent prices.

The Countrywide Lettings Index for new lets in Greater London fell 0.5% over the year in July 2016 to an average rent of £1,280 a month and the first such drop since 2010. However, for renewed tenancies the average Greater London rent grew 8.4% to £1,247.

In London, rental stock increased by a third, partly the consequence of a rush in buy-to-let activity ahead of a hike in stamp duty on 1 April, which helped boost supply in the market. Across the whole of the UK, rental supply rose 23%, helping to slow rent growth.

The average UK rent on new lets increased 1.5% to £951 in July. On renewed contracts, the rise was 2% to an average of £904. On a combined measure, Greater London's average rose 4.7% to £1,222 and the UK's by 2.5% to £867.

"The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing," said Johnny Morris, director of research at Countrywide.

"Stock levels were already running higher than usual due to investors bringing forward purchases in the rush to beat the stamp duty deadline in April. Added to that, uncertainty in the sales market in the run up to, and after, the EU referendum has caused more discretionary sellers to turn to the rental market."

Rental prices for new lets

Region	Ave Rent Jul-16	Ave Rent Jun-16	Ave Rent Jul-15	July Rent YOY
Greater London	£1,280	£1,294	£1,287	-0.5%
Central London	£2,638	£2,448	£2,583	2.1%
East of England	£963	£978	£928	3.8%
South East	£1,173	£1,241	£1,186	-1.1%
South West	£856	£831	£829	3.3%
Midlands	£703	£696	£671	4.8%
North	£694	£698	£663	4.7%
Scotland	£689	£710	£696	-1.0%
Wales	£671	£700	£685	-2.0%
Total	£951	£960	£937	1.5%

Rental prices for renewed contracts

Region	Ave Rent Jul-16	Ave Rent Jun-16	Ave Rent Jul-15	July Rent YOY
Greater London	£1,247	£1,201	£1,150	8.4%
Central London	£2,566	£2,482	£2,481	3.4%
East of England	£918	£886	£927	-1.0%
South East	£1,134	£1,130	£1,159	-2.2%
South West	£813	£798	£796	2.1%
Midlands	£664	£649	£649	2.3%
North	£625	£624	£628	-0.5%
Scotland	£633	£632	£647	-2.2%
Wales	£650	£620	£604	7.6%
Total	£904	£886	£886	2.0%

Rental prices for all occupied units

Region	Ave Rent Jul-16	Ave Rent Jun-16	Ave Rent Jul-15	July Rent YOY
Greater London	£1,222	£1,219	£1,167	4.7%
Central London	£2,419	£2,425	£2,459	-1.6%
East of England	£876	£884	£837	4.7%
South East	£1,004	£1,002	£990	1.4%
South West	£747	£745	£729	2.5%
Midlands	£638	£637	£623	2.4%
North	£631	£630	£620	1.8%
Scotland	£640	£641	£633	1.1%
Wales	£652	£650	£647	0.8%
Total	£867	£867	£846	2.5%