RENTS could soon fall if London’s army of foreign-born workers deserts the capital after Brexit, lender Nationwide said today.
Analysis published alongside its latest house price index showed EU workers as a major factor behind the surge in private rentals in recent years.
Since 2011 migration has accounted for 600,000 of the 1.5 million increase in the number of private renters, while in 2017 nearly 90% of all EU residents arriving in the UK rented privately.
In London alone there are a million EU-born renters and Nationwide highlighted falling net migration since the Brexit vote. It added: “With the ongoing uncertainty around Brexit and the rights of EU citizens once the UK leaves the EU, we may see a slowing in housing demand (and particularly rental demand) in the years ahead, if it results in slower migrant flows.”
Official rental data shows private rents cooling in the capital with growth of just 0.9% in the year to September, making London the second slowest region for rents in the UK. That contrasts with the rest of the country, where average rents are growing nearly twice as quickly at 1.6%.
Alongside slower migration, the rental market also saw a splurge of investment before tax restrictions on buy-to-let lending came in 18 months ago, increasing supply.
The Nationwide house price index, meanwhile, showed tepid 0.2% growth in October but the lender said a rate rise tomorrow would have a “modest” effect on borrowers.
“Growth likely will slow soon after the Monetary Policy Committee raises rates,” Pantheon economist Samuel Tombs said.