Cost of renting hits new high

October 17, 2014 at 9:24 AM Leave a comment

The cost of renting a home hit a new high in September as landlords made record returns on their investments, figures showed today.

stack of cash

The average rent charged on a property in England and Wales rose to £768 during the month, according to LSL Property Services.

Higher rents combined with strong house price growth helped push total annual returns on an investment property up to 13.4 per cent, nearly double the rate of 7.9 per cent seen in September last year.

As a result, the average landlord made a return of £22,706 on their investment during the 12 months, before deductions for mortgage repayments and maintenance.

The total was made up of £8,379 from rental income and £14,327 through property price growth.

Looking ahead, if house prices continue to rise at the rate seen during the past quarter, total annual returns could hit 22.1 per cent over the next year, or £40,489 per property, LSL said.

But there was some good news for tenants as the annual rate at which rents are rising slowed to just 1.5 per cent in September, down from 2.4 per cent in August.

Landlords expect rent rises to remain muted in the year ahead, predicting they will increase by an average of just 1.8 per cent during the next 12 months.

The group said there had been a resurgence in demand for rental properties outside of London and the South East, with the East posting the biggest annual hike in rental costs at 3.1 per cent, followed by the South West at 2.3 per cent.

But in other regions of the country, the cost of being a tenant has fallen.

Average rents in the West Midlands have dropped by 2.4 per cent in the past year, while in the North East they are 2.3 per cent lower and in Wales they have edged down by 1.1 per cent.

David Newnes, director of estate agents Reeds Rains and Your Move, said: “Historically rent rises have broadly tracked inflation. And as the wider cost of living grows ever more slowly, so too has the cost of renting a home.

“That said, autumn is always a busy period for the lettings industry, and this has been no exception.

“Looking ahead, it is likely that rents in most parts of the UK will have now reached their seasonal peak – so as the market cools along with the autumn weather there may be opportunities for some tenants to pick up a favourable deal.”

Tenants finances improved during the month with only 7.2 per cent of rent in arrears, down from 8.5 per cent in September last year.

But despite the drop, there was still £256m of late rent during the month.

 

Entry filed under: General News. Tags: , , , .

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