The latest figures show that rents reached a record high in May after four successive months rising. In May, the average rent rose by 0.5 per cent to £696 per month. The growth means the average rent is now higher than in May 2010. The average yield remained at 5.1 per cent in May.
As you’d expect, rents have risen the fastest in London; in fact they’ve risen by 7.8 per cent in the past year. The next biggest rises were seen in the North East and the East Midlands.
David Brown, commercial director of LSL Property Services, who released the figures, commented:
“Tenant demand has been especially bubbly in recent months. Soaring inflation has taken its toll on would-be buyers’ deposit funds. The rocketing cost of living, combined with ongoing difficulty first time buyers are experiencing in obtaining a mortgage is increasing the number reliant on rental accommodation. With the fierce competition for homes, rental gazumping is becoming more commonplace and properties are being let beyond asking price, putting further upwards pressure on the market. For tenants, unable to buy, renting is becoming less affordable as demand booms. Rents are increasing at twice the rate of wages.”
If property values continue on their current trend, LSL says a property investor could expect to make a total annual return of 5.7% over the next year. This is equivalent to £9,404 per property and much higher than the returns available on most savings accounts.
If you’re thinking about expanding your property portfolio, now could be the perfect time