ON rents hit another record high in October as landlords celebrate solid returns on investment, according to the LSL buy-to-let index published today.
Average monthly rents in the capital jumped 0.9 per cent to £1,102, breaking the £1,100 mark for the first time.
That represents a seven per cent hike on the year, and holds landlords’ yields steady at 5.1 per cent.
The rest of the country saw slower rises in rents, with the average monthly bill climbing 0.4 per cent for England and Wales to £744.
Despite taking rents to 3.4 per cent higher than at the same point last year, and yields for landlords to 5.4 per cent, that October climb represents the smallest national increase since May.
The East of England was the only area to see prices rise more quickly than London, with rents up 1.4 per cent on the month to £760.
But not every region recorded growth – rents dropped 1.8 per cent in the East Midlands to £564 per month, and 1.6 per cent in Wales to £547.
The lowest yield for landlords was recorded in the South West at 3.9 per cent on the year.
“Despite the deceleration, the fact that monthly rents rose by twice the rate seen a year ago points to the underlying strength of tenant demand,” said LSL Property Services’ director Davide Newnes.
“Looking ahead, it’s difficult to see rents remaining stationary once the winter lull has passed.”
“Banks still need to set aside large sums of money for high loan-to-value lending, so in the longer term the number of first time buyers won’t return to the level necessary to significantly undercut the strong demand for rental property.”
However, initiatives like the New Buy scheme and the Funding for Lending initiative may take some of the heat out of the rental market in the near future by boosting mortgage lending and house buying.