PRS Rents Lower Than 2008

Analysis of rental data by Belvoir Lettings has revealed that private rented sector (PRS) rents have fallen across the UK by an average of 2.4% since the start of the credit crunch in 2008.

Belvoir said it gives a much more accurate view of the UK PRS rental market on a national scale rather than the overhyped reports concentrating on London and the South-East.

PRS rental prices have been driven down by a combination of factors, including tenant pressure, welfare reform and landlords securing long term rental income using additional services like Tenant Referencing and Rent Guarantee Insurance to select only the best tenants for longer tenancies.

Belvoir CEO Dorian Gonsalves commissioned MyPropertyPowerTeam.co.uk contributor Kate Faulkner, as an independent analyst, to study advertised rents going back almost five years in Belvoir offices across the UK.

Gonsalves said: “The Belvoir five-year rental index, which analyses advertised rents on a simple three-month average, is an important and definitive study, which crucially and unlike many other studies has been tracking data since March 2008 – six months after the credit crunch started. We have also been able to track figures from 139 offices across the UK, and break our analysis down into national, regional and county levels. This report is very much aimed at helping landlords and tenants understand the market and how it is currently operating right across the UK rather than in pockets of London and the South East. We also hope that the index, which will be released on a monthly basis during 2013, will assist government bodies in understanding the market and enable them to incorporate this information into their policy and decision-making processes. Every few months we read media reports of rising costs in different parts of the country, which can raise expectations and be very confusing for those investment landlords whose rents have shown little or no increase since the credit crunch began. Our figures confirm that the market is still very much on the road to recovery, with UK rents down by around 2.4% compared to the heights of five years ago. However, it also shows that the rental market is working well keeping in line with affordability. Landlords should be aware of how their income is tracking at a local level and whether they are keeping up with inflation. It is important to secure the right balance between investing money to keep properties well maintained and minimise voids, but to also be aware of relevant local market factors and know when to increase rents so that they are in line with inflation.”

The report shows

• In 2008, UK PRS rents of £705 (GBP) per month were being achieved.
• During 2012 average monthly UK rents were £682 (GBP).
• If rents had risen in line with inflation since 2008, tenants would be paying an average of an extra £113 (GBP) per month.
• Average PRS rents in Wales have remained stable over the past 12 months at around £600 (GBP) per month.
• However, some regions are still recovering from the effects of the credit crunch, rents in the East Midlands, East Anglia, the North-West and Yorkshire were still below September 2008 levels, 4 years on.
• Areas stabilising around 2008 levels include West Midlands and Scotland
• Areas where rents have recovered to 2008 levels and are rising include the South-West, South-East, North-East and London.