AS REAL earnings continue to plummet, rents have jumped 7.6 per cent in London in the past year, to a record high of £1,110 per month.
According to David Newnes, director of LSL Property Services, rents rose on the year in every region of England and Wales for the first time in nearly two years. “Optimism is seeping in to the housing market, but from the top. For many tenants the monthly ebb and flow is still draining.”
The average yield on rental properties for landlords stayed more or less flat, ticking up from 5.2 per cent in April 2012 to 5.3 per cent last month. Yields for London alone also remained largely static, moving from 4.9 per cent to five per cent. This indicates that rising rents are unlikely to have been driven by increased profit-making.
If rental property prices maintain the same trend as the last three months, the average investor in England and Wales could expect to make a total annual return of 5.7 per cent per property over the next 12 months – equivalent to £9,496 per property, LSL has calculated.
Newnes said that while one tenth more rental property had been made available by owners since 2008, there was a shortage of available supply in the housing market.
“The more fundamental squeeze is still coming from a lack of new building,” he added.