Landlords saw rents soar to a record high in October, says Britain’s leading letting chain.
Rents are still going up – but the rate of increase is slowing – according to LSL Property Services, which owns letting chains Your Move and Reeds Rains.
Tenants have paid more to let private homes for seven months in a row – seeing prices hit new peaks on London and the regions.
Average rents in the capital are £1,102 a month – 7% up on 12 months ago, while those in the regions are up 3.4% in the year to an average £744 a month across England and Wales.
Although went up slower in October, the 0.4% rise was still more than double that of a year ago.
Nevertheless, two regions have still seen falls in rents paid by tenants – down 2.2% for the year in Wales and 1.5% down in the East Midlands.
Director David Newnes, said: “Rents are rising, but the good news for tenants is the rate of increase is at the lowest for five months.
“A combination of improved buyer activity and a seasonal slowdown has taken some of the heat out of the rental market as it enters the traditionally quieter final months of the year. However, despite the deceleration, the fact that monthly rents rose by twice the rate seen a year ago points to the underlying strength of tenant demand.”
Newnes predicts rents will keep rising in 2013, after a winter lull.
“Looking ahead, it’s difficult to see rents remaining stationary once the winter lull has passed. Admittedly, the sales market has shown signs of life in the last month, and the Funding for Lending Scheme seems to be acting as a catalyst for a modest improvement in the mortgage market,” he said.
Yields have pushed up as well, fuelled by rent rises aided by static house prices. The average annual gross yield for a buy to let home was 6.6% in October – against 5.9% in September.
Newnes explained that if rents continue to rise at the same rate as the past three months, the average investor should expect a total annual return of 4.3% per property over the next 12 months.