ONS reports 2.3pc rise in rents in the year to September

New figures reveal that the cost of renting a private home in Britain has increased by 2.3% over the past year, rising faster than the overall cost of living. The news comes to light as official data reveals a quarter of the properties bought in the third quarter of 2016 were buy to let or second homes.

Figures from the Office for National Statistics (ONS) point to a 2.3% rise in private rental prices in the year to September, a rise which exceeds the 1% increase in the cost of living, as recorded by inflation.

The South of East of England saw the highest rise in rents, as typical rents grew by 3.5%, ahead of a 3% rise in the East of England. On average rental prices grew by 2.5% in England, 0.1% in Wales, and fell by 0.1% in Scotland.

Figures indicate that rents have been rising at a slower rate than house prices, with the ONS reporting that residential house price growth in Britain has typically been stronger than rental price growth. The average 12-month rate of house price inflation between January 2014 and August 2016 was 7.3%, compared with 2.1% for rental prices.

Meanwhile, new figures from HMRC reveal that a quarter of properties bought in the third quarter of 2016 were buy to let or second homes.

Out of the 235,000 properties eligible to pay stamp duty land tax (SDLT) in Q3 2016, 56,100 properties paid the additional 3% surcharge levied on second homes since April this year.

Overall, the number of property transactions eligible for SDLT in Q3 was 13% higher than the previous quarter and 1% higher than Q3 2015.

The sale of properties paying the additional 3% surcharge has raised £670m in tax so far this year.

In total, since the introduction of the levy in April, there have been around 86,400 property sales eligible for the surcharge.

An HMRC statement said:

“Following feedback from our users, we have included a quarterly estimate of the amount of SDLT paid due only to the 3% higher rate on additional properties.”

Jeremy Duncombe, director of Legal & General Mortgage Club director said:

“Given the turbulence in Britain’s political landscape in the last six months, it’s reassuring to see that today’s statistics have not shown a drastic drop in transaction numbers.

“It is comforting to see that the number of property transactions under £250,000 is continuing to rise – even if higher value property transactions have declined year on year.

“At the top end of the market, stamp duty increases and market uncertainty have led to a slowdown above the £1m mark. At this level, homeowners are having to carefully weigh up the significant costs of moving.”

 

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