Rents are still rising and have surged to a record high, according to the latest figures from Britain’s largest letting agent chain.
Although the rate of increase has slowed – the monthly rise of 0.4% for October is still more than twice that of 12 months ago, says LSL Property Services, which runs letting chains Your Move and Reeds Rains.
After seven straight months of rents going up, tenants are paying 3.4% more than a year ago, with the average private buy to let rent hitting a new peak of £744 a month.
In London, rents surged by 7% to £1,102, compared with September 2011.
However although national average rents are rising, the amount paid by tenants fell in Wales – down 2.2% in the year – and the East Midlands – down 1.5% in the year.
The firm’s director, David Newnes, said: “Rents are rising, but the good news for tenants is the rate of increase is at the lowest for five months.
“A combination of improved buyer activity and a seasonal slowdown has taken some of the heat out of the rental market as it enters the traditionally quieter final months of the year. However, despite the deceleration, the fact that monthly rents rose by twice the rate seen a year ago points to the underlying strength of tenant demand.”
Newnes expects rents to keep on rising in 2013 after the traditional Christmas lull.
“Looking ahead, it’s difficult to see rents remaining stationary once the winter lull has passed. Admittedly, the sales market has shown signs of life in the last month, and the Funding for Lending Scheme seems to be acting as a catalyst for a modest improvement in the mortgage market,” he said.
Increasing rents and static house prices have seen yields rise for landlords in October to 6.6% on a rental property, up from 5.9% in September.
If rental property prices maintain the same trend as the last three months, the average investor in might expect a total annual return of 4.3% per property over the next 12 months.
