- October sees rents dip on a monthly basis, now averaging £806 per month across England & Wales
- However the cost of renting a home has risen considerably in the last year – with annual rent rises at 4.7%
- Yorkshire & Humber and the East Midlands both defy a wider slowdown to see rents hit fresh local records
- Tenant finances improve in October, with arrears representing 7.9% of rent due, down from 8.6%
- Landlords see total annual returns rise to 11.6%, as purchase prices accelerate – but yields drop to 5.0%
Rents across England and Wales have fallen between September and October, according to the latest Buy-to-Let index from Your Move.
Average rents now stand at £806 per month. This follows a month-on-month fall of 1.2% – down from September’s all-time record high of £816.
Despite this, rents are considerably higher than a year ago. In the twelve months since October 2014, average rents have risen by 4.7%. After negative CPI inflation of -0.1%, this represents real-terms annual rent rises of 4.8%.
Adrian Gill, director of estate agent Your Move, comments: “The very peak of the lettings season has now passed – which means better deals are possible for tenants looking to rent later in the autumn.
“However, there has been no huge change in the fundamentals pushing rents higher than in previous years. Whether or not the sharpest mismatch between supply and demand lasts into October, the fact remains that the private rented sector is growing rapidly, driven by demand – and new properties coming onto the rental market are letting like hot cakes.”
“Many tenants are earning more, and while buying a home is still an unrealistic stretch for millions, renting a home is luckily still within reach. The private rented sector is much more closely connected to what people earn than the property purchase market, which has the financial insulation of mortgage payments and interest rates. By contrast, rents are more fundamentally limited by monthly budgets – and now that ceiling is being lifted, average rents are likely to continue to rise rapidly on an annual basis.
“In the absence of enormous numbers of new homes, this could see an increasing share of incomes spent on rent. Deep thought and decisive action is needed from all levels of government and industry, if the current incentive for investment is to overcome all the planning and financial obstacles littering the path to supplying enough options for tenants.”