Rents in England and Wales up 2% year on year, latest index shows
Annual rent rises in England and Wales have increased to 2%, the first real time growth since September last year, to average £753 per month, the latest index shows.
It means that rents have returned to levels last seen in November 2013 but the rise is just 0.1% when inflation is taken into account, according to the index from LSL Property Services.
The report also shows that tenant finances have improved with 7.3% of rent in arrears, down from 7.8% in June and 8.1% last July. But landlords have seen total returns moderate, down to 10.3% per annum as property price rises cool.
‘The rental market is approaching its busiest period yet rent rises remain modest. However, tenants looking to rent a new property this month still need to budget the same as they would have in November. At a time when the UK is facing a serious shortage of homes, and with purchase prices rising steadily, that is an immense achievement for the private rented sector,’ said David Brown, commercial director of LSL Property Services.
‘Rents have tracked inflation for many years and as of July remain down 0.2% in real terms since the start of 2010. This is testament to serious improvements in the supply of new homes to let, thanks to investment by landlords. If that investment keeps flowing, and the right incentives for new landlords remain, this positive trend should continue,’ he pointed out.
A breakdown of the figures show that rents in nine out of 10 regions are higher than a year ago. The fastest annual increase is in the South East, where the average monthly rent is now 3.8% higher than in July 2013.
This is followed by a 3% annual increase in the North West, and annual rent rises of 2.3% in London. The North East is the only region where rents have dropped over the last 12 months, falling 3.8%.
On a monthly basis, eight out of 10 regions have seen rents rise in July. The fastest month on month increases are in the South East and North West, with rents respectively 1.7% and 1.6% higher than in June. Coming a close third is the East of England, where rents are up 1.5% over the past month.
Only two regions have seen rents fall on a monthly basis. The South West experienced a 1% monthly drop in average rents in July, while in the West Midlands rents were 0.5% lower than in June.
As of July the gross yield on a typical rental property in England and Wales stands at 5.1%. This represents a fall of 0.2% since July 2013 when the gross yield on a rental property averaged 5.3%. However, yields are steady on a monthly basis, at 5.1% over the past six months. .
Taking into account price growth alongside void periods between tenants, total annual returns on an average rental property stand…