Rents across England and Wales have overtaken all previous records, two new buy-to-let surveys have found.
A third report has also found steep rent rises in Scotland.
According to LSL, average rents in September reached £757 per month, up 2.1% on a year ago and a rise of 1.8% on August.
Sequence has come up with a similar rent figure, putting it at £781 per month, although saying this is an 11% annual rise.
According to LSL, rents now stand £13 per month higher than the previous all-time record set in October 2012 when monthly rents averaged £744 across England and Wales.
Record rents also mirrored faster lettings activity. The number of new tenancies across England and Wales increased by 6.5% compared to August.
On an annual basis, the East of England was also the only region with lower rents – down 1.4% since September last year. However, the latest rises take London rents to levels 4.4% higher than a year ago, followed by 3.1% in Wales and 2% in the West Midlands.
Seven out of ten regions have all-time record rents. Rents have never been higher in Wales, the West Midlands, East Midlands, North-West, Yorkshire and the Humber, London and the South-East. Only the North-East, East of England and the South-West have had higher rents in the past.
Gross yields on a typical rental property rose to 5.4% in September, compared to 5.3% in August. Taking into account capital accumulation and void periods between tenants, total annual returns on an average rental property rose to 7.4% in September, compared to 6.1% in August. In absolute terms this represents an average return of £12,129, with rental income of £8,164 and capital gain of £3,965.
Tenant finances experienced a setback in September, with the total amount of late rent across England and Wales rising to £294m – or £30m more than August. As a proportion, this represents 8.5% of all rent, up from 7.8% in August.
However, on an annual basis, tenant arrears have improved, with the total amount of late rent down £13m, and down as a proportion on an annual basis from 9.1% of all rent in arrears in September 2012.
Stephen Nation, head of lettings at Sequence, said that a shortage of supply in London could lead to higher rents.
He said a 1% monthly rise in tenancy demand was coupled with a 5% monthly decrease in supply. Sequence puts average monthly rents in London at £1,456, up 7% on a year ago.
In Scotland, website Citylets says rents are on the rise, currently standing at an average of £687 per month, up 1.5% on a year ago. The highest rents are in Aberdeen at £1,002 – an 11.5% rise on last year.
The price rises have been driven by lower supply and the continuing growth of the oil and gas industry.
Lisa Brebner, managing director of Simpson Brebner Lettings in Aberdeen, said the shortage of rental properties is critical.
She said: “We are seeing an unprecedented level of rent being achieved with properties almost having to be advertised with ‘offers over’, similar to the selling market.”
Source: Letting Agent Today
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