The most recent Buy-to-Let Index from Your Move and Reeds Rains has revealed that rents are now 16.3% higher than five years ago. In the last twelve months alone they rose by 2.8%.
The average residential rent across England and Wales, in absolute terms, has increased by £107 since January 2010, reaching £763 in January 2015. Over the last five years this adds up to an average annual rent rise of 3.0%, although this represents a real terms increase of just 0.6% per annum when adjusted for inflation over the same period.
Looking at things on a monthly basis, rents fell 0.6% between December 2014 and January 2015. Annually, though, rents are 2.8% higher than was seen last January.
“The nature and affordability of UK housing is transforming before our eyes,” Adrian Gill, director of Reeds Rains and Your Move, said. “In the last five years the private rented sector has successfully absorbed an unprecedented influx of tenants, while rental prices have broadly tracked inflation.”
He added that, as ever, the devil is in the detail. As growth accelerates, even more investment will be needed for the industry to keep up. Gill believes more buy-to-let landlords will be required to help solve the crisis in demand for homes to rent.
“In real terms, rents have risen only incrementally,” Gill added. “But any real and sustained growth in rents should offer a clear lesson.
“As with the purchase market, the only clear way to make rented housing dramatically more affordable is to build far more homes, far more quickly than is currently the case. And until this happens, landlords are likely to continue to earn double digit returns on their investments.”
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