The average cost of renting a home nationally actually decreased by 0.2% over the past year to £659 per month. When inflation is taken into account, rents are down approximately 4% on last year.
However, according to research by LSL Property Services, average rents in England and Wales were 3.9% higher in April 2013 than the same time the previous year. They say that the average monthly rent is now £736, with London rents way out in the lead, standing a new record of £1,100 per month. This is 7.6% higher than last year.
David Newnes, director of LSL Property Services, said, “Rents everywhere are higher than a year ago – at a time when pay has crept up at the slowest rate in years.
“Landlords across the UK have increased the stock of rental properties by around 10% since 2008 – but the more fundamental squeeze is still coming from a lack of new building.”
LSL estimates that the total annual return on a rental property increased to 5.9% in April, representing an average return of £9,679, with rental income of £7,807 and assumes a capital gain of £1,872.
If rental property prices were to maintain the same trend as in Q1, the average investor in England and Wales could, over the next 12 months, expect to make a total annual return of 5.7% on each property. This would be equivalent to £9,496 per property, before all expenditures such as maintenance and mortgage payments.
But contrary to LSL’s rental statistics, tenants were found to be struggling less with their rental payments in April than in the previous month. Total arrears in April were £282m (8.4% of all rent across England and Wales), down from £284m (8.5%) in March. This would make sense if average rents across the UK did, in fact, fall.
Move with Us, a property services network owned by LSL, produced rental statistics of its own that puts rents even higher than LSL. They say that average rents across the country are at £966 per month, while putting the average London rents at a massive £2,182 per month.
It is clear from the data quoted above that figures for the average UK residential rents are very distorted due to London’s abnormally high rents compared to the rest of the country. Research from property analytics consultancy Hometrack suggests that a distinction should be drawn between the housing market in London and the rest of Great Britain.
Their research has shown that, when removing London from the equation, rents across the country over the last five years have remained broadly flat, even more so when excluding data from the South-East. Outside London and the South-East, rental growth has averaged just 1.5% in nominal terms over the past three years. But in London, it has averaged 6.8%, and 2.3% in the South-East.
This is basically in agreement with the latest figures from the HomeLet Rental Index, which showed that the average cost for a Londoner renting a home increased 8.1% from April 2011-12 and 9.3% from April 2010-11, halving to 4.8% from April 2012-13. They place the average rent in the capital at £1,236 per month.
They showed that when the Greater London figure is removed, the average cost of renting a home around the rest of the UK actually decreased by 0.2% over the past year to £659 per month. When inflation is taken into account, rents are down approximately 4% on last year.
In other statistical news, Government figures show that just 1.3% of over seven million deposits that have been placed in one of the deposit protection schemes since 2007 has been ended up requiring formal dispute adjudication.
The figures show that there have been a total 10,657 complaints made against the three deposit protection schemes, a tiny number in relation to the number of deposits held.
Eddie Hooker, chief executive of MyDeposits, said, “It’s good news for tenants, as it shows the vast majority are happy with the return of their deposit at the end of the tenancy. It also shows that the relationship between landlord/agent and tenant is improving.”