The UK’s booming’s economy will mean richer tenants paying more to rent homes which will boost earnings for landlords, says one leading firm of letting agents.
However, the firm, LSL Property Services which carried out the research, says that landlords around the country are currently seeing rent increases running at below the cost of living rises.
The firm which runs Your Move and Reed Rains says tenants in the UK saw rents rise by 1.5% in December compared to the same month a year previously and that is less than the 2% rate of inflation that the Consumer Price Index recorded last year.
The Retail Price Index, which includes various living costs, saw inflation hit 2.7%.
Landlords poised to benefit from economic boom
LSL’s commercial director David Brown said: “This has been the most painful recession in memory but we are now coming out the other side and by investing heavily in homes to rent, landlords are playing a pivotal role.
“Prospects [for the sector] are looking good with early indications showing that wage expectations are up and inflation is under control.
“This means that with more prosperous tenants in 2014 there will be a more prosperous private rented sector.”
The firm says that the average rent for England and Wales is now £745 a month and that while rents have risen across the board, the rate of increase differs between regions.
For instance, tenants in London are paying 4% more while those renting in the West Midlands, Yorkshire and eastern England are all paying less in rent.
The firm also reveals that gross yields for a buy-to-let property remained steady at 5.3% in the final quarter of 2013, compared with the previous quarter.
Rental demand outpaces supply
They also say that the number of new tenancies in December increased by 7.7% but that’s below the November figure of 12.7% with the firm explaining that many people declined to move home over the festive period.
Meanwhile, the figures for rent increases in 2013 are mirrored in another piece of research carried out by letting agents Countrywide.
They say rents increased by 2% last year and that demand for rental property grew by 6%.
Demand, the firm says, is surging outside the South East of England where the rate of supply is not keeping pace and while landlords in Greater London saw their rents increase by 3.4% last year, rents actually fell in Central London by 0.2%.
Countrywide say this is as a result of the ‘Olympics effect’ after there were significant rent rises in 2012 to take advantage of the Games.