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Landlords keep rent rises lower than inflation

Friday 03 March 2017

New figures show inflation in rents is below that of general inflation as landlords seek to maintain strong and positive relationships with tenants.

The annual rate of rental price growth reached 0.8 per cent in February - below the general rate of inflation, now running at 1.8 per cent - according to analysis from the HomeLet Rental Index.

The average UK rent for a new tenancy starting in February was £895 per month, up from £888 a year earlier, based on HomeLet’s research.

Of the 3,726 landlords surveyed, 96 per cent say they are happy with their existing tenants.

Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company, said: “Our research again demonstrates that the vast majority of landlords have positive working relationships with their tenants.

“In recent months, we have seen landlords treading very carefully with rental price rises, amid concerns about tenants’ ability to pay. 

“With more than one in five landlords blaming an increase in their tax liability for raising rents, it remains to be seen if this can sustain.

“Landlords will hope the Chancellor does not make it harder for them to continue supporting their tenants in this way, with further changes to the tax system or legislation, as he prepares to unveil his Budget on the 8th March.”

Year on year rental price growth has fallen from a high point of 4.7 per cent in June 2016, with the slowing of rental price inflation most distinct in parts of the country where rents previously grew the fastest.

The survey also found that more than half of landlords say they may be forced to increase rents as cost pressures, partly caused by looming tax changes in April, mount.

Despite this, almost a third of those – 29 per cent - plan to defer this to 2018.

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