Disruption caused by the Southern Rail strikes could be damaging the desirability of areas of the South East, according to new research from buy-to-let lender Landbay’s Rental Index.
The pace of rental growth slowed in five out of six key areas affected by the strikes in the second half of 2016, falling into negative territory in Surrey, and only accelerating in Brighton and Hove.
The strikes began in August, but the issues began affecting commuters in July, when Southern Rail implemented an emergency timetable. Comparing rental growth in the second half of the year to the first, suggests landlords are having to either limit rent increases or cut rents, to meet dwindling levels of demand, Landbay said.
In Surrey, which hosts major Southern stations such as Guildford and Dorking, rents which were growing by 0.12% in the first half of 2016, fell by -0.02% in H2. In East Sussex, home to Hastings station, rental growth slowed from 0.26% to 0.15%, while West Sussex saw a slowing from 0.24% to 0.19%.
Kent (0.27% to 0.19%) and the town of Milton Keynes (0.34% to 0.17%) also saw cooling rental growth in the second half of the year. The only area to see accelerating rental growth, a sign of strong tenant demand, was Brighton and Hove, which saw rents grow by 0.24% in H1, rising to 0.26% in H2.
Average rents across the whole South East grew by 0.21% over the six months from January to June, but slowed to 0.13% in July to December. The region consequently went from seeing the second fastest rental growth over the last five years, to the seventh fastest, with only the North East and London exhibiting slower rental growth.
“Rental prices along the Southern network haven’t plummeted just yet, but these figures do suggest that it is beginning to have an impact on local property markets,” said John Goodall, CEO of Landbay.
“While the strikes may have caused headaches for commuters across the network, the dwindling rents are a small positive for tenants. Whether the lower rental prices are worth the delays is a whole other story.
“The research demonstrates the influence of these unavoidable external factors on the rental market. Our recent report has already highlighted the positive impact on infrastructural developments like HS2 and Crossrail on the rental market, however this is pushing prices in the opposite direction. With disruption expected to continue, people will begin to re-evaluate the criteria when it comes to renting – whether that be distance from London or reliable transport links.”