June sees fastest rent rise on record
Typical rents in England and Wales reached £789 in June after increasing by 5.6% year-on-year and 1.4% month-on-month.
Adrian Gill, director of estate agents Reeds Rains and Your Move, attributed rising rents to growing wage packets and a stronger economy, although he warned tenants that things might get worse in the months ahead.
He said: “We mustn’t lose sight of the driving force behind rent increases – the mismatch of supply and demand. Expanding our housing stock needs to become a national priority.
“If anything, competition for homes is only going to get more intense over time. The fierceness of housing competition needs to be met with an equal dedication to homebuilding.
“There may be new factors on the horizon too. In the wake of the summer budget’s reduced assistance for landlords, we might see many aim to pass additional costs onto their tenants.
“If so, rents would receive yet another acceleration.”
As rents rose more tenants struggled, as the proportion of renters in arrears climbed to 8.7% from 7.6% the month before and 7.8% in June last year.
June 2015 was the first month since July 2013 when rent growth outstripped house prices, as prices rose by 4.5% in the 12 months to June.
Despite rising rents returns for landlords actually decreased to 9.2% in the year to June 2015, down from 9.3% in May and 11.9% in the year to June 2014.
The average landlord in England and Wales saw a return of £16,216 in absolute terms, before deductions such as mortgage payments and maintenance.
Rents in the East of England in particular took off, driven by growth in Cambridge and interest from London commuters, as they rose by 13.8% in the 12 months to June 2015 to £839.
London was second place, as rents rose by 9.6% since June 2014 to £1,241. After London rents rose by the more stable 2.2% in the South East to stand at £778 in June.
Gill added: “At the heart of the Eastern region, strong property price growth and some of the best job prospects in the UK combine to make Cambridge fertile ground for rental growth.
“But one city alone can’t account for the record rate of growth experienced across the whole Eastern region.
“We also have to take into account the wealth of commuter areas for the capital based there.
“It may be that we’re seeing an unusually high number of Londoners making the move out to Essex and Hertfordshire, while keeping their London salaries, driving up demand for higher end rental property.”