Private rents more expensive than ever

18 October 2013

Rents across England and Wales are now more expensive than ever after they climbed to an average of £757 a month in September - a level that is "devastating" for tenants, according to housing charity Shelter.

The September figure - up 1.8% on August and an annual increase of 2.1% - is £13 a month more than the previous record high set in October 2012, according to LSL Property Services' buy-to-let index.

The number of new tenancies increased by 6.5% in September, compared to August, and by 9.2% compared to September 2012.

Rents went up in nine out of 10 regions between August and September, with the fastest rate recorded in the South East, where rents rose by 3.3%.

The North West experienced a 2.7% monthly rise, followed by the West Midlands at 2.6%. The only region where rents fell was the East of England, where there was a drop of 0.8%.

Annually, the region was the only one to experience a fall in rent - down 1.4% since September last year.

However, rents in Wales, the West Midlands, East Midlands, North West, Yorkshire and Humber, London and the South East are now at all-time highs. Only the North East, East of England, and the South West have ever seen them higher.

New heights

David Brown, commercial director of LSL Property Services, said: "A new peak in tenant demand has driven rents to new heights, well above all previous records. Higher rents in almost every region show that, despite government schemes, buying a first home is still a difficult aspiration. This is not only down to low salary growth, but also a general shortage of supply - which is the underlying reason why homes are getting more expensive.

However, Roger Harding, spokesperson for housing charity Shelter, said: "This is devastating news for England's nine million renters. As more people are priced out of home ownership and waiting lists grow longer, too many families are being left trapped in the unstable and expensive private rental market.
"Every day Shelter hears from people who are having to cut back on essentials as they struggle to pay their rent each month. With wages flat-lining, the fact that rents have reached record highs means that even more people will find it harder and harder to make ends meet."

Meanwhile, gross yields on a typical rental property rose to 5.4% in September, up from 5.3% in August - taking total annual returns on to 7.4% in September, compared to 6.1% a month earlier. In absolute terms this equates to an average return for landlords of £12,129, with rental income of £8,164 and capital gain of £3,965.

LSL said that if rental property prices continue to rise at the same pace they have over the past three months, the average buy-to-let investor in England and Wales could expect to make a total annual return of 13.6% over the next year - or £23,028 per property.

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