UK House Prices Push Rent to Record High of £770 a Month
By Lianna Brinded
uk housing house prices
Soaring UK house prices have pushed rents across England and Wales to a record high of £770 per month.
According to the latest Buy-to-Let Index from the UK's largest lettings agent networks, Your Move and Reeds Rains, while tenants' finances have improved, rent has also risen 1.5% over the last twelve months.
"Rents have edged to a new record and the rental market is pulsing with new demand. Yet at the same time, tenants are getting on top of their finances – helped by a cooling pace of such rent rises," said David Newnes, director of estate agents Reeds Rains and Your Move.
"Better affordability is good for tenants in the longer run too – and for landlords who can rely on steady revenue to pay the bills.
"That helps to support a virtuous cycle of only gradual rent rises. Alongside slower overall inflation, a material boost to the supply of properties available to let has helped keep rents from rising as quickly as in previous years."
Annual rent rises increased by 1.5% in the twelve months to October 2014 while month-on-month rents rose 0.3%, or just £2 compared to the previous month of September 2014.
Meanwhile, landlords' gross returns reach 13.3% over last year, due to shorter void periods and rising house prices.
"Landlords have benefitted from a spurt of rapid house price growth. But as price rises steady a little, landlords can rely on newly stable rental yields," said Newnes.
"Gross yields on a typical property dipped over the last six months as purchase prices grew faster than rents, and now yields have steadied again, just above the long-run average of five per cent.
"Stable yields aren't the only good news for landlords. Letting a property now involves even less risk of not getting the rent on time, and tenant arrears could reach a new record low in the coming months.
"That should boost demand from tenants and investment from landlords. Good news on the affordability of renting is good news for the whole industry."
According to Office for National Statistics data, house price annual inflation was at 12.5% in England, 5.8% in Wales, 7.6% in Scotland and 10.9% in Northern Ireland.
The average UK house price in September 2014 stands at £273,000 (€342,025, $427,614) compared with £274,000 in August.
The regional breakdown showed that the average property price in England stood at £285,000, £172,000 in Wales, £143,000 in Northern Ireland and £197,000 in Scotland.