Asking price rents reached a new record high in May after four successive months of rises, according to the latest Buy-to-Let Index from LSL Property Services, which owns national estate agency and lettings chains Your Move and Reeds Rains.
In May, the average rent in England and Wales rose by 0.5% to £696 per month, overtaking the previous high of £692 in April.
The growth means that the average asking price rent is now £30 per month higher than May 2010 – an annual inflation of 4.4%.
In the past 12 months, rents have risen in all but two regions in England and Wales, says LSL.
Rents have risen the fastest in London, where they increased 7.8% in the past year. The next biggest rises were in the North-East and the East Midlands where rents increased by 6.4% and 6.2% respectively.
In the last year, average rents have only fallen in the South-West, where they declined by 0.4%, and the East of England, where they have fallen by 1.2%.
David Brown, commercial director of LSL, said: “The rocketing cost of living, combined with ongoing difficulty first-time buyers are experiencing in obtaining a mortgage, is increasing the number reliant on rental accommodation.
“With the fierce competition for homes, rental gazumping is becoming more commonplace and properties are being let beyond asking price. For tenants, unable to buy, renting is becoming less affordable. Rents are increasing at twice the rate of wages.”
LSL estimates that the total annual return on a rental property now stands at 2.9% with high yields offset against a slight annual decline in rental property prices.
The total average annual return is the equivalent of £4,891 – £7,414 in rent, with a capital loss of £2,523. If property values continue on their current trend, a property investor could expect to make a total annual return of 5.7% over the next year – equivalent to £9,404 per property.
Tenant arrears decreased in May, with 11.5% of all UK rent unpaid or late by the end of the month. Although a slight decrease from the 11.8% in the previous month, it is above the 10.6% average of 2010.
The index is based on over 18,000 rental properties on LSL’s books across the UK.
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