After 19 months of poor performance, according to a report, rents in the capital finally stopped exerting downward pressure on the national average and inched 0.03% higher last month, allowing average UK rents to rise 0.07% from December to a record high of £1,198.
Rents across the UK rose in January for the first time in almost two years, including in London, which has remained in negative territory for months, according to a report by Landbay, a buy-to-let mortgage lender.
In comparison to this time last year the number is a 0.66% increase and lays the foundation for what is expected to be a year of climbing rents in the UK.
John Goodall, CEO and founder of Landbay, said “With all the tax and regulatory changes landlords have shouldered over the past couple of years, an uplift in rents has been on the cards for a while, and is likely to continue into 2018.”
While every region saw rising rents in January, the speed of rental growth has not been consistent across the UK.
At a country level, Wales saw 0.1% rental growth, while Northern Ireland lagged behind at 0.01%.
The East Midlands experienced rental growth of 0.18% in January alone, followed by 0.13% in the East of England. Meanwhile, rents in the North East paralleled the 0.03% growth seen in London.
Recent forecasts from Savills have predicted that rents will rise by 2.5% this year, and by a cumulative 15.5% over the next five years.
If rents continue to rise, it suggests that the increased cost and compliance pressures on landlords are beginning to flow through into higher rents for their tenants.
Goodall added: “With all the tax and regulatory changes landlords have shouldered over the past couple of years, uplift in rents has been on the cards for a while, and is likely to continue into 2018. Stamp duty changes pushed up transaction costs for landlords back in 2016, as have a raft of new regulations from the PRA landing in 2017.
“This, together with gradually rising interest rates, will eventually push up borrowing costs for banks, and consequently for landlords, who will have to pass some of these costs onto tenants in the form of higher rents.”