Rents Rise Across Uk Outstripping Prices
New figures from LSL Property Services, the company that owns Your Move and Reeds Rains, show that rents across the UK have risen by an average of 4% year-on-year.
LSL’s figures show that March saw a month-on-month rise of 0.5% to an average of 7.3% per month, and a 4.2% year-on-year rise. The UK average is now £735 per month.
In the North-East, rents rose by 0.9% month on month and in Yorkshire and the Humber the rise was 0.6%. In the South West, rents fell by 0.5% and in Wales by 0.4%.
London saw the highest rise in rents, with a 1.3% month on month rise to an average of £1,106 per month – a 7.9% year-on-year increase. That compounds a sharp split between the London area and the rest of the country: London’s rents are already 145% higher than in the North-East, and soak up 40% of the average renter’s income. Ian Fraser, Managing Director of HomeLet, observed that there is ‘a real North/South divide within the lettings industry.’ He went on to point out that while Londoners frequently both pay more rent and earn higher incomes, people in the North East ‘earn less than their counterparts in the capital, but they may also have more disposable income.’ Mr. Fraser pointed to data showing that ‘an average tenant renting on their own in the North East pays around 27% of their income towards rent.’ Mr Fraser contrasted this with the ‘substantial’ 40% average for the London area.
While the South West has seen its rentals fall, from a landlord’s point of view rental yields have risen. In Southampton, the highest rental yields in the UK combine with lower house prices than the national average to offer the best buy-to-let deal in the country. Rental of £900 with an average property price of £138k means yields are around 7.82%. That compares with much lower prices in Blackpool, averaging around £75k, but significantly lower rents too, at around £500, giving a slightly lower yield of 7.81%, meaning Blackpool is a significantly easier market to enter.
Both these markets compare with London where house prices whisper ever closer to averaging a quarter of a million pounds – at last count, the average London home cost £244k. Across the country, house prices rose by an average of 2.2% year-on-year, meaning rents are accelerating twice as fast as prices.
For buy-to-let landlords, that’s obviously advantageous, but for tenants it has already become a problem. According to housing charity Shelter, 8.5% of all rent in the UK is in arrears, and the sum owed in back rent is £284m, £36m higher in March than in February. For some, then, the rise in rents may be nominal, merely representing an increase in a sum they already cannot afford to pay. And the improvement in yields that landlords can look forward to on paper could be just as illusory, if tenants aren’t actually able to come up with the cash.