Average buy to let rents were up in 2016 – but the rate of increase has slowed to just 1.12%.
Renters are paying an average £1,188 a month to let their homes, up from £1,177 at the start of the year, adding an extra £11 a month or £132 a year to their payments to landlords.
Average rents outside London are £749 a month – and increase of £14 a month or £168 a year.
The data is published by trade body the Council of Mortgage Lenders (CML) based on research by peer-to-peer buy to let lender Landbay.
The report reveals that tenants are stagnating rents by opting for two bedroom homes where they can.
“If tenants have more two-bed properties to choose from, they will pay less in rent, which goes some way to explaining why properties of this size have seen the greatest decline in rents so far in 2016,” said Landbay CEO John Goodall.
“They fell by 0.6% in the year to November, and were 0.81% lower than their peak of £1,943 in March this year. It has been a similar story for one-bed flats in the capital, with rents falling by 0.28% in 2016.”
The research also found rents are rising around the proposed HS2 rail main stations even though construction of the line is years away.
“All of the key stations outside London have seen rental growth above the national average of 8.8% since the start of 2012,” said Goodall.
“Birmingham Curzon Street (23.7%) and Birmingham (22.4%) have seen remarkable uplifts, while in Leeds (15.3%), Sheffield (15%) and Manchester (14.5%) rental growth has also outstripped the rest of the country.”
Goodall forecasts fewer homes to rent in 2016 due to buy to let mortgage restrictions and tax changes forcing landlords to review their purchase plans.
“Tenants will have no choice but to compete for limited stock, leading average rents to rise above the level of inflation in 2017. With inflation forecast to hit 2.7%, this means rents rising by at least 3% over the year,” he said.
