The big news from our Buy-to-Let index is that the average rent across England and Wales hit a record high* in July of £804 a month, up 1.9% on June’s figures and a significant 6.8% higher than in July 2014. Higher rents in Yorkshire and the Humber, up 2% year on year, have added to the consistently strong rises in the South of England to produce these record-breaking levels.
Adrian Gill, Director of Reeds Rains, says, “This is a sign that the rest of the economy is picking up. These rent rises are a reflection of heavier wage packets being fed back into the economy. But just because a car can break speed limits doesn’t mean it should. Homes have become a scarce commodity and the appetite for rental properties has begun to outstrip the available stock. This has driven rents up even faster than house prices. A clear and concerted effort towards new-build properties is the most sensible way to address the issue.”
While rental yields are up, overall annual returns are down, reflecting a cooling in house price growth. The average gross yield for July stood at 5.2%, up from 5.1% the previous month and from 5% a year ago. Returns for the year ending July 2015 were 8.7%, down significantly from 10% in June and 12.5% 12 months previously. The average capital gain was £7,188 and average gross rental income for the 12 months to July 2015 was £8,444 (before mortgage and maintenance costs).
In July this year, 8.4% of all rent payable was in arrears and, while that’s a slight reduction on last month, it is still over 1% higher than this time last year. Although that might seem like bad news and the market continues to experience peaks and troughs, the overall trend across the past five years still shows arrears gradually falling.
The rental market in Wales continues to hold steady. Average monthly rent stood at £566 in July, marginally down on June but 0.6% higher than 12 months previously. Yields remain well below the average for England and Wales, at 4.3% versus 5.2%.
On 17th November, Housing Rights is holding its annual private rented sector summit in Belfast. The one-day conference will focus on how to ensure the PRS is fit for purpose and look at the future of private renting in Northern Ireland.
With the PRS accounting for almost 20% of the country’s housing stock, it is now significantly bigger than the social housing sector and is attracting growing numbers of low income and vulnerable households. As part of its housing strategy for the term, the Government committed to reviewing and improving standards, supply and the tenant/landlord relationship within the PRS and this annual conference will examine how those things can be achieved.