Advertised rental prices increased by an average of 1.9 per cent across Great Britain in 2012 and are expected to continue at a similar rate next year.
The average rental rate rose by £37 per month, reaching a 12 month high of £976 per calendar month at the end of October.
Robin King, director of Move with Us remarked: “The underlying value and return from rental properties has been robust during 2012, in marked contrast to the poor returns gained from personal savings. Buy-to-let mortgages made a welcome return, with applications rising by eight per cent.”
Growth in advertised rental prices in London was slightly ahead of the UK average, rising by 3 per cent in 2012.
Rents increased much faster than expected in April, as property owners tried to capitalise on the Olympics. Local rental markets were flooded with short-term lets charging as much as £3,000 per week, though price levels fell back in line when the Olympics finished in August.
The region with the largest change in rental rates was the North East, with advertised prices increasing by more than 13 per cent in October and November alone.
Another region prospering was Yorkshire and Humber which experienced large increases in advertised rents, around 7 per cent, when compared to others in Q3. It remains however, one of the cheapest regions to rent in the UK, with average advertised rents at just under £600 per month.
Gross rental yields have remained at 5 per cent throughout Britain in 2012, with the majority of regions returning an average yield of around 4 per cent. Returns have remained stable as both house prices and rents have increased at similar levels. Overall, this suggests that buy-to-let properties were a worthwhile investment in 2012.
King continued: “Overall, advertised rental prices in 2013 are projected to continue to increase at a similar rate to 2012. However, they are likely to remain below Q3 2012 levels until April of next year. Yields are expected to remain at 2012 levels, as rental prices will consistently react to changes in average property prices.
“This, combined with rent increases in the majority of areas, could increase the revenue generated by rental properties. The current cyclical trend suggests that the average advertised rental price will remain below £1,000 next year and are likely to peak at around £990 in 2013.”
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