This is according to the latest buy-to-let index from LSL Property Services.
In September, UK rents rose to £689, surpassing those seen in August 2008, the previous market peak. The average UK rent is now 3.1% higher than the same time last year, following eight consecutive months of rises.
The average yield remained stable at 4.9% in September, as rising rents were matched by modest house price growth in the past three months.
David Brown, commercial director of LSL Property Services plc commented: “Landlords have seen tenant demand continue to hit new heights. The mortgage market remains tight and many buyers simply cannot get the finance to get a foot on the property ladder.
“And with potential spending cuts on the horizon, and uncertainty over the direction of the economy, many buyers are choosing to remain in rented accommodation for longer – perhaps to wait for house prices to fall.
“As a result, demand for rental accommodation is increasing, and supply is not rising fast enough to match it. This has turned the buy-to-let market into a landlord’s market, and many renters face increasing rental costs while they delay their house purchase.”
The resurgence in rents has been driven by a strong performance from London and the South East in 2010. In September, London rents hit their highest on record. Landlords increased their rents by 1.1% to £972 per month in September. They have risen by 6.8% since January.
Rents in the South East rose by 0.9% in September, while those in the East of England and the West Midlands rose by 1%. The South West and North West reported modest falls.
Although arrears dropped from August, they remained high. Unpaid rent totalled £230m across the UK in September, down from £266.3m in the previous month. Nevertheless, this still was the equivalent of 10% of all rent across the UK remaining unpaid.
Commenting on the data, David Salusbury, chairman, National Landlords Association, said: “The situation isn’t the same in every part of the country. While the strongest rent increases have been in the London area, landlords in the South West and North West have experienced a decline in rental income.
“Research by BDRC Continental has shown 58% of landlords did not increase their rent in the last 12 months and a further 12% actually decreased it. The survey also found more than two-thirds of landlords have no plans to increase rents over the next three months.
“The reality facing the sector is one of VAT increases, expected interest rate rises and a current lack of mortgage finance, all of which landlords have to cope with.”
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