The average rent in England and Wales reached £738 per month in July after only modest rises, according to the latest Buy-to-Let Index from LSL Property Services plc.
The research found that rents rose more slowly than inflation over the last twelve months amounting to a monthly increase of just 0.2 per cent, compared to July 2012 when rents rose by 1 per cent on a monthly basis.
Coming after rents saw no change at all in June, this means the average rent in England and Wales has risen by only one pound since May 2013. On an annual basis, this leaves rents 1.8 per cent higher than a year ago – meaning the year-on-year increase has fallen below the rate of Consumer Price Index inflation (2.8 per cent in July).
Meanwhile, the number of new tenants in July has grown strongly. Between June and July the number of new tenancies increased by 6.6 per cent across England and Wales. On an annual basis, there were 12.3 per cent more new lettings in July than in July 2012.
Regional variation remains significant. Six out of ten regions saw rents increase in July. Wales and the South East saw the fastest monthly rises, with rents in both regions up by 0.8 per cent since June. Rents in the North West were just behind, 0.7 per cent higher than last month, while London came in fourth place after a 0.3 per cnet monthly rise between June and July.
David Brown, commercial director of LSL Property Services, comments: “This summer, the house purchase market has jerked into motion. And everyone is feeling the impact of that sudden change of gear. Buying a first home might only be possible for those with a big enough deposit and sufficient earnings, but the effects are reverberating through the rental market too. The supply of rental accommodation is increasing, while demand has softened slightly because of the improvement in first-time buyer numbers.
“In the medium-term we expect rents to at least keep up with wider inflation. Alongside the continued struggle for the majority of would-be first-time buyers, more tenants are entering the market. And this record demand is still confronted with a shortage of new homes to let. It’s also worth bearing in mind that the UK economy as a whole is still struggling with the same constraints on wages and inflation.
“However, every section of the economy is now building up a head of steam – and reigniting the property market is a natural part of that. It’s unlikely July will be typical after the initial change of pace in the purchase market, but a few months of more affordable rents are a win-win for everyone.”
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