Buy To Let Updated:
Rents seem to be on a similar course to house prices at the moment, with them only ever seeming to be on the rise. In fact, the latest Buy-to-Let Index from Your Move and Reeds Rains shows that rents are rising at the fastest rate seen for six months, and in April they hit an average of £793 across England & Wales.
This represents an increase of 0.3% from March, the fastest monthly rate of growth seen since September 2015, and means that rents are now 2.4% higher than they were at this point a year ago – equating to an extra £19 per month. In fact, new all-time records have been hit in three regions, with rental markets in the East Midlands, West Midlands and East of England having never seen higher rents.
Rents in the East of England now stand at an average of £848 – second only to London – representing a new high following an annual rise of 4.8%, while rents in the West Midlands grew by 6.2% over the same period to break through the £600 barrier for the first time. However, property to rent in the East Midlands saw the greatest annual rent rise of 8.5%, taking average rents in the region to a new all-time record of £616.
This probably won't come as welcome news to renters, as "anyone looking for a home to rent may now find that the better deals of the winter months are over", commented Adrian Gill, director of lettings agents Your Move and Reeds Rains. This has been driven by renewed interest from tenants and competition between them to secure the most desirable properties, he explained, with this kind of activity accelerating the market.
However, some of the reasons behind the rent rises are extremely encouraging: "Tenants looking to find a property to rent are more likely to be in work, getting pay rises, and feeling able to pay their other bills," said Adrian. "These wider economic fundamentals are shifting on the side of healthier household finances.
"But very little has changed in terms of the supply of homes to let. So for many tenants, it's likely that a large proportion of any earnings growth is swallowed up by higher rents."
Arguably, the recent stamp duty surcharge for buy-to-lets and second homes won't make the situation any better, with it being widely expected that landlords will pass on this additional cost to tenants in the form of even higher rents. However, for the time being, it doesn't look as though this is having a detrimental impact on tenant finances as a whole, with the figures showing that paying the rent is actually becoming slightly easier for tenants, despite the clear rise in cost.
As of April, 8.1% of all rent due in the month was in arrears, compared with 9.1% in March, which suggests that the situation is gradually improving. This may present a more challenging picture than at this point last year, with tenants being behind with only 7.0% of all rent in April 2015, but the fact that things are improving is still a positive outcome.
Furthermore, looking at the long-term picture shows an even more encouraging improvement, with April's arrears figure still being well below the peak recorded in February 2010, when 14.6% of all rent payable was in arrears. "All the signs are right for a strong improvement in tenant finances," concluded Adrian.
Want to get on the buy-to-let bandwagon and benefit from the favourable market conditions? Compare the top buy-to-let mortgages to get started.
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