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Demand for Rental Property Remains Strong in June 2016

Demand for rental property was strong in June as rental rates increased by 3.5% in year-on-year across the UK, despite fears post-referendum.

Demand for rental property was strong in June as rental rates increased by 3.5% in year-on-year across the UK, despite fears post-referendum.

HomeLet’s Rental Index for June, representing one of the most comprehensive data sets available on the UK’s private rental market, shows that the UK’s rental market continued to grow in June despite uncertainty in the markets following the EU referendum.


The index indicates that rents agreed on new tenancies across the UK (excluding London) over the three months to the end of June increased by 3.5% compared to June 2015. In the capital, rents were found to have increased by 3.9% over the same period.


HomeLet’s findings suggest that demand for rental property remains strong despite the pace of growth in June remaining relatively subdued, especially when compared to the 4.4% year-on-year growth witnessed in May across the UK and 6.2% increase seen in London.


Slowing rental growth is said to be part a wider trend that has developed throughout the first half of 2016. Due to higher levels of stock caused by landlords rushing to complete their purchases ahead of the Stamp Duty April deadline and post-referendum uncertainty, the rate of rental rate increases has started to stabilise.


However, the projected growth in the UK’s population, through natural population growth and net migration, is likely to continue fuelling growth in the UK's private rental market, says the report.


The outlook for the sector in the second half of this year is said to depend partly on the aftermath of the UK’s vote to leave the European Union, with some economists expecting the referendum to affect construction in the housing sector. This could potentially exacerbate the imbalance between demand and supply currently present in the UK’s private rental market.


As the events following the referendum vote continue to unfold and the market earns further clarity, demand for rented accommodation could also increase as more people decide to postpone their property purchases until there is more certainty in the housing market.


HomeLet’s results reflect Knight Frank’s latest index, which found that the underlying demand for rental property in prime central London has strengthened in the six months to June despite a slight decline of 3% in June.

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