Average rents have reached an all-time record high as the rental market approaches its autumn peak, according to the latest Buy-to-Let Index from LSL property services (parent company to large lettings networks Your Move and Reeds Rains).
The average residential rent across England and Wales is now £761 per month. This is £3 higher than the previous record £758 which was set in October 2013.
On a monthly basis, August rents were on average 1.1% higher than was seen in July – or an increase of £8.
This leaves monthly rents 2.4% higher than a year ago, when in August 2013 average monthly rents previously stood at £743. In absolute terms this annual growth represents an increase of £15.
“Autumn is when more people move to take up new opportunities, to build new careers and to start new chapters. That is what the rental market is all about for many people by providing flexibility and it’s what it does well – at a cost that’s risen in line with inflation for at least half a decade,” said David Brown, LSL’s Commercial Director.
“No year is the same, and already 2014 has been like no other. The reawakening of mortgage lending startled the property market into a new spring of life earlier in the year. The benefits have been felt across the board, not just for first-time buyers but for tenants too. Investment means rents are now only 1% higher in real terms than at the start of 2010,” he added.
According to the Buy-to-Let Index, August gross yields on the typical rental property in England and Wales stand at 5.1%, despite a monthly increase (0.1), this figure represents a fall of 0.2 percentage points from one year ago, down from 5.3% in August 2013.
Taking into account price growth and void periods between tenants (but before costs such as mortgage repayments or maintenance), total annual returns on an average rental property stand at 12.7% over the twelve months to August. This is up from 6.4% in the year to August 2013, and an increase of 0.6 percentage points since July, when returns were 12.1%.
Commenting on the Buy-to-Let figures, David Brown concluded: “Landlords have benefitted from higher property prices, which is helping portfolios to expand and more homes become available to let. Gross rental yields are still in line with long-run averages, and rental income is more reliable as personal finances gradually leave the great recession behind them.
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