Member Article

Private rents increase in April

Rents in England and Wales rose for the first time in three months in April, pushing average rents up to £709 per month.

This represented a rise of 0.5%, and despite the monthly tise, the rale of annual increase steadied with rents at 2.4%, compared with 2.7% in March.

David Newnes, director of LSL Property Service said: “Lenders are retreating from higher loan?to?value lending in light of rising funding costs and the economic outlook.

“On top of this, first?time buyers now must save for longer to pay for stamp duty ? in
addition to finding substantial deposits ? making house purchase a more distant prospect for many tenants.

“As a result, tenant demand will only strengthen, providing impetus for rental inflation in the
long?term. That said, future rises are likely to be tempered by affordability concerns, with landlords weighing up the prospect of empty properties or tenant arrears against significant rent hikes.”

The North West and the East of England saw the largely monthly increases, of 1.3% and 1.1% respectively. Rents in London rose by 0.7% to £1,032 pcm, 46% higher than the national average. Rents fell by 1.3% and 0.6% respectively in Wales and the West Midlands compared to March.

Weakened house prices in April also led to a total annual return on a rental property to dip to 3.4%, in comparison to 2.9% a year ago. This represents an average return of £5,589, with a rental income of £7,624 and a capital loss of £2,035. Yields of rental property were 5.2%, in comparison to 5% a year ago.

Rent arrears also rose, and 9.9% of rents were either late or unpaid at the end of the month, up from 8.7% in March. Overall, unpaid rents amounted to £306 million, a 14% increase from £267 million the previous month.

Mr Newnes added: “Weakening property prices in the aftermath of the end of the stamp duty rush contributed to a dip in overall returns, with capital losses offsetting healthy growth in rental income.

“But the picture is varied across the country. For instance, steeper rental inflation and robust house prices in London means that the average landlord in the capital has seen returns of £11,215 in the last year in cash terms – double the national average.

“However it is the consistently strong yields – which compare favourably to savings rates and average dividend yields – that are drawing long?term investors to the market.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .