Rents hit new high

Rents hit new high

The latest buy-to-let index from LSL Property Services had shown a fourth successive month of rent rises.

Average rent across England and Wales was up 1% to £725 in July.

This surpasses the previous high of £720 in October 2011.

Rent increased across almost all regions.

London rent continued to rise at the fastest rate, with new highs being reached for the third consecutive month.

Annual rental inflation also increased, climbing to 2.9% from 2.4% in June.

David Brown, commercial director of LSL Property Services comments: “The backlog of frustrated first-time buyers in the private rented sector showed no sign of clearing in July — in fact, it is still growing.

“As lending to those without substantial deposits remains depressed, demand for rented accommodation can only go one way in the long-term — providing further upwards momentum for rents”

Mr Brown talked about the summer peak where recent graduates and those with new jobs begin to look for new homes.

This leads to fierce competition which is contributing to the new highs.

David Whittaker, managing director of Mortgages For Business, added to this point: “We’re fast approaching the rental market’s busiest few weeks of the year.

“The early autumn period when demand reaches its peak and rents have the potential to soar as multiple renters vie for the same properties.

“The fact that rents have hit a new high before the summer has even finished is a measure of how high demand is already and tenants should be prepared for rents to climb even higher over the next few months.”

Landlords saw an average total annual return of 4.5% on a rental property in July.

This means an average return of £7,459 with rental income of £7,763 and a capital loss of £305.

Mr Brown added: “Banks and building societies are tapping into this robust demand, and buy-to-let is the only sector of the mortgage market showing consistent growth, with lending increasing 18% year on year.

“It’s crucial that lenders continue to increase their commitment to property investors to allow the private rented sector to expand at the rate needed to accommodate the growing number of frustrated would-be buyers.”

Whilst rent went up, the amount of tenants with unpaid or late rate also went up for a second consecutive month in July.

9.3% of all rent was late or unpaid at the end of the month, an increase from 9.2% in June.

In total, unpaid rent amounted to £295m, 2% more than the £289m late or unpaid in the previous month.

Mr Whittaker said landlords had to be careful not to get greedy and price their properties out of the market.

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