Landlords took a hit from the season slump last month as many reduced rents to have tenants in their buy to lets over Christmas.
December saw rent levels cut to rates last seen in August 2012, according to LSL Property Services, one of the UK’s leading letting agents.
Average rents fell by 0.9% in England and Wales to £734. Despite this drop, rents were still 3.2% higher than December 2011.
Seven regions saw a drop in December rates compared to the previous month, with the East and North East showing the largest fall of 1.7%. In London rents dropped by 1.5% and in the South east by 1.3%.
Three regions saw rent increases – the West Midlands at 1.3%, the South West at 0.9% and Wales by 0.4%.
Over the year, rents were higher than the previous 12 months for eight of the 10 regions, with London leading the way with the biggest rise of 6.3%. The South East followed with a 3.9% annual increase. Rents fell by 1.2% in the East Midlands and by 0.8%.
LSL director David Brown said the figures are a “seasonal blip” rather than a market turn.
“Tenants were in a stronger bargaining position as landlords reduced rents to fill empty properties in the slower winter months. Any underlying weakness in the mortgage market will mean competition will heat up once more,” he said.
Brown also highlighted the problems that continue for those looking to leave the rental market and get on the property ladder, such as struggling to save a deposit.
With rises in property values during 2012, annual rental inflation has pushed the growth of yearly returns on rental properties by 6.2%. This equates to an average £9,986 return – rental income of £7,835 and capital gain of £2,150 on the property.
If the trend continues in the same way, the average buy-to-let investor could see an annual return of 4.3% in the next year.
LSL runs letting agent brands Your Move and Reeds Rains.
