Rents reach record high

Sarah Davidson

October 16, 2015

Analysis from Your Move and Reeds Rains suggest average rents now stand at a new record of £816 per month, after rising by 1.6% between August and September.

The pace of change is even clearer on an annual basis – up 6.3% over the last 12 months, from £768 in September 2014.

Rents in London are rising most rapidly, up 11.6% on an annual basis to a new record of £1,301 per month.

The annual change in London has also overtaken the East of England, where rents are now rising marginally more slowly, yet are still up 8.8% over the last 12 months.

Record rents in the East Midlands are now 6.7% higher than twelve months ago, at £603 per month, while the West Midlands has seen its own record of £592 per month, or 5.2% higher than in September 2014.

Meanwhile, South Western rents have risen at a comparable annual rate of 5.5% to stand at a fresh local record of £691 per month.

Adrian Gill, director of estate agents Reeds Rains and Your Move, said: “Rents are rising strongly in real terms due to the recent acceleration in wages, and the much deeper and longer-term shortage of available properties across the UK – of all tenures.

“As long as this supply and demand imbalance keeps up, it is hard to see any reversal in the speed of rent rises.”

Gill said total returns for landlords have cooled since last year, when rapid growth in purchase prices took this towards 15%.

Now total returns are more dependent on rental yields rather than the bonus of capital accumulation, which makes this figure more dependable.

He added: “There are also fresh glimmers of a new burst of strength in the purchase market this autumn, which could provide another additional boost for property investors. But landlords should be most positive about rental yields – thanks to such rapid rent rises, yields are actually growing even as property prices pick up too.”

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