News Column

Property rents rise at twice speed of average earnings

July 17, 2014

Hilary Osborne,

Rents in England and Wales rose at twice the speed of average earnings in the year to June, according to the latest research by property company LSL.

The average monthly cost of renting a home increased by 10 during the month to 747, the figures showed, and was up by 1.4% year-on-year. This is double the 0.7% increase in earnings reported on Wednesday by the Office for National Statistics.

The housing charity Shelter described the increase as "yet more devastating news" for England's 9 million renters. Its chief executive, Campbell Robb, added: "As our housing shortage continues to push a home of their own further out of reach, more and more families are being left with no choice but to live in expensive and unstable private rented homes.

"We hear from renters every day who are having to cut down on their food or heating just to pay the rent, or ending up trapped in homes too small for their families."

LSL's index, which is based on analysis of around 20,000 properties and looks at the rents achieved on them, showed the biggest jump in rents over the year was in the south-east, where tenants have seen costs go up by 2.9% to an average of 762 a month.

Within London, the average monthly rent has increased by 1.6% since June 2013, to 1,132, while in the north-east rents have fallen by 4.6% to 507.

Rising rents and property prices have helped push the annual returns made by landlords to the highest level for four years, LSL said, with the average gains from a buy-to-let property hitting 19,475 in the past 12 months. This is made up of a rental income of 8,158 and capital gain of 11,317.

LSL added that if rental property prices continue to rise at the same pace as the past three months, the average buy-to-let investor in England and Wales could expect to make a total annual return of 13.4% over the next 12 months. That is equivalent to 23,718 per property.

"Landlords have noticed these incentives [high capital gains and rental yields], and this has helped to bring a good number of new properties into the lettings market," said David Newnes, director of estate agents Reeds Rains and Your Move, part of LSL Property Services. "Some ideas like rent controls and outlawing tenant fees would only serve to drive investment away."

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Source: Guardian Web

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