LANDBAY chief executive and founder John Goodall (pictured) has warned that the slowdown in UK rental growth shows that political uncertainty and affordability pressures are causing consumers to feel the pinch.
UK rents grew by just 0.02 per cent in May, the slowest pace for over half a decade, according to the latest rental index produced by the peer-to-peer lender.
Landbay, which specialises in buy-to-let mortgages, said that the slowdown signals a dip in demand for new tenancies, as renters come to terms with a snap General Election, and ongoing uncertainty around Brexit negotiations.
“Yes, uncertainty about the future of the UK will cause some people to delay a decision to move, but affordability pressures are also starting to pinch the pockets of renters across the country,” said Goodall.
“Wage growth is now lagging behind inflation for the first time since mid-2014, and with less money to spend on such a major monthly outlay, renters will be factoring this into their tenancy decisions.”
London continues to be the main driver of the slowdown, with rents in the capital falling by -0.94 per cent in the year to May, compared to growth of 1.62 per cent across the rest of the UK.
Landbay’s research found that rents have now fallen for 12 consecutive months in London, due to a combination of dampened demand and heightened supply. Many homeowners are choosing to rent out their properties until the weak sales market recovers, the firm said.
“On the supply side, a wave of new rental properties caused by last spring’s hike to Stamp Duty, together with falling house prices, will no doubt both be playing a small part in the ongoing softening of rental growth,” said Goodall.
“Nevertheless, barring a major surprise from either the election or the Brexit negotiations, long term population and construction trends suggest that rents will soon be growing faster than inflation again.”
Landbay, which became fully regulated by the Financial Conduct Authority just before last Christmas, recently struck two new partnerships with mortgage intermediaries, to expand its network and reach a wider range of borrowers.
And in March, it cut interest rates and arrangement fees, as well as widening its eligibility criteria, to boost loan origination.