Rents at record highs – but capital losses in sight

Rents regained their record highs last month, according to LSL, owners of the Your Move and Reeds Rains chains.

The company said rents rose by 0.8% during April as annual rent inflation increased to 4.4%.

The average rent stood at £692 per month, the same as last November, but 4.4% higher than a year ago. In London, monthly rents reached an average of £988, nearly 8% higher than a year ago.

However, tenant arrears also climbed, with 11.8% of all UK rent in arrears. Unpaid rent totalled £284m across the UK in April, an increase of nearly 27% from the £224m unpaid in March.

Total annual returns remain steady at 2.1%, says LSL, as rent rises are balanced by dipping property prices in last three months.

David Brown, commercial director of LSL, said: “The rental market is heating up. Competition is fierce and tenants are paying a premium to secure properties.

“The average landlord is charging nearly £30 more a month than a year ago, and the rate of increase is unlikely to tail off as lending to first-time buyers remains subdued and demand for rental homes is stronger than ever.”

However, LSL warned that if property values continue to decline, yields will be hit: over the next year, a property investor could expect to make a slight annual loss of £61 per rental property, with £8,307 in rent offset by a capital loss of £8,368.