FindaProperty.com reports falling rental prices

Following six months of rising rents and falling stock levels, the UK rental market experienced a drop of 1.3% in asking rents according to the December FindaProperty.com Rental Index.

The average UK rent is now £820pcm, down from £831pcm in November and 3% down on the same time in 2008 (£845). This rent reversal means that UK rents are now at the same level they were at the start of the rental recovery in May.

The decline in rental values may largely be due to an increase of stock as the market slows prior to Christmas with tenants holding out until the New Year before signing new leases, but factors including increased unemployment and a poor economic outlook have also played a part. Following a busy autumn, there are now 1.7% more properties to let in December than a month previously, and stock is 4% higher than in December 2008.

Nigel Lewis, FindaProperty.com’s Property Expert comments: “Our figures reveal a straightforward economic reality. There are more properties on the market and therefore renters have more choice so landlords are competing for their business. This rental price competition is made more severe by the recession as tenants, fearing or experiencing unemployment, become more concerned than normal about how much properties cost to rent.

“But looking forward, there are a number of factors that point towards a bounce back after the New Year despite December’s drops, the most prevalent of which is increased demand from students, immigrants and first-time buyers, who continue to be priced out of the sales market or are unable to acquire sufficient mortgage finance.”

London rents continued to rise, up 0.7% this month to £1651pcm, more than double the national average. However, seven of the eleven regions saw price falls, with Yorkshire and the Humber experiencing the biggest regional decline in rents, down 8.8% from £579pcm in November to £528pcm in December.