Average rents in England and Wales accelerated at a faster rate in June than in any other month on record, according to Your Move and Reeds Rains' latest Buy-to-Let Index.
Monthly rents reached an average of £789 in June, standing 1.4% higher than the £778 recorded in May and up 5.6% on an annual basis since June 2014.
This is also the first month in two years that rents increased at a faster rate than house prices for comparable properties, the agents report.
Representing the fifteenth month of consecutive growth, rent rises in the East of England accelerated at a record pace to a new record high, increasing 13.8% over the twelve months to June 2015 to stand at £839.
The next best figures were recorded in the capital, where the average rent has increased by 9.6% since last June, pushing rents in London up to an average of £1,241 per month.
The agents report that average rents in Yorkshire & the Humber also hit a record high last month, while in the South East there was a 'mild slowdown'.
Last month's figures show that the 'pedal is pressed to the metal' in the rental market, according to Adrian Gill, Reeds Rains and Your Move director.
“Growing wage packets and a strengthening economy mean that a greater number of tenants are able to afford higher rents. With such an overall shortage of housing in the UK, rental costs are primarily driven by the amount tenants are capable of paying. Rents have also decoupled from inflation. While record low inflation fuelled by falling oil prices might bring clothes or food within the range of tenants’ purchasing power, it doesn’t have much of an effect on the property market in the short term,” he says.
Looking at yields for landlords and property investors, the agencies report that the gross yield for a rental property in England and Wales remained at 5.1% in June – the same figure recorded in May and June 2014.
Total annual returns fell again in June, but only slightly. On average, landlords in England and Wales have seen returns of 9.2% over the year ending June 2015 – down slightly from 9.3% in May and 11.9% in the year ending June 2014.
“Resilient yields backed up by rapid rent rises are a boon for landlords in otherwise trying times. Though the Summer Budget threatens to eat into their profits, record rents should provide buy-to-let investors with some comfort: the fundamentals still make being a landlord an attractive proposal,” Gill concludes.