Buy to let rents rise nearly 5% in a year

AFS Team·28 January 2013·3 min read
Buy to let rents rise nearly 5% in a year
Rents are up almost 5% in a year to an average £782 a month across the UK, according to the latest figures from a leading buy to let insurer.

The figures for December 2012 show that rents climbed 1.1% month-on-month, but 4.7% over the year.

However, Homelet explained that figures for Greater London were influencing the results.

Rents for the rest of the UK excluding Greater London showed a rise in 2012 of 1.7% to £654 per month.

For the capital, renting a house was 6.9% more expensive in December 2012 than in December 2011, reaching £1,212 a month.

East Anglia saw the biggest yearly increase – up 8.6% to £710 - followed by Greater London – up 6.9% to £1,212, and Yorkshire and Humber – up 4.3% to £580.

Two regions saw rents drop – Wales by 2.8% to £559 and the East Midlands fell 0.5% to £555.

Ian Fraser, managing director at HomeLet, said a supply shortage is driving the increase in average rental prices. December normally shows a fall in average rents, with summer months being the time of increases as more student rentals are being agreed, he explained.

“This year, we’ve seen this trend buck though,” he said. “In contrast, the average income of tenants has decreased – albeit a small amount by 0.3% – over the past year. This is a very worrying trend for tenants who have seen their average income increase below the rate of inflation.”

The private rented sector is seeing a boom in many areas and increasing numbers of tenants, combined with a falling supply of rental properties, are allowing landlords to reap the highest possible yields, he explained.

In Scotland, the rents were up in the year by 2.3% to a £573 average monthly rent, the West Midlands were up 3.7% to £615.

Homelet also revealed Greater London, East Anglia and Yorkshire and the Humber are providing the best returns for landlords, while those with properties in Wales and the East Midlands might struggle to achieve a good yield.