Annual rent rises halve over the last year


Housing stock

Annual rent rises have halved over the last year, according to a major lettings network, as more tenants have found it easier to make the jump onto the property ladder.

Private sector rents stood at £745 per month in December across England and Wales, marking a 1.5% year-on-year increase, according to LSL Property Services, which owns national chains Your Move and Reeds Rains.

As well as being lower than the consumer prices index (CPI) rate of inflation at 2%, December's annual increase in rents is just half the level seen a year ago. Rents increased by 3.2% in the year to December 2012.

London saw the steepest annual rent rise, up 4.0% from December 2012 to £1,131 on average. This was followed by a 3.2% annual increase in the South West to reach £662 typically, and a 2.5% rise in the South East to around £775.

But rents in the East of England fell by 4.4% year-on-year to reach £717 on average.

The next steepest annual fall was in the West Midlands, where a 2.7% slide took rents to £550. Rents in Yorkshire and the Humber were 2.1% lower than in December 2012, at £530 typically. Meanwhile, with zero annual change, rents in Wales have returned to £554 - the same level as 12 months ago.
On a monthly basis, rents saw their usual seasonal drop as the market slowed down for Christmas, edging down by 1%, or around £8, between November and December.

The sharpest monthly drop was a 2.0% fall in the South East, while the strongest monthly increase was in the North East, which saw rents edge up by 1.5% to reach around £525.

Tenant arrears also worsened in December, with 9.7% of rents late or unpaid, up from 6.6% in December. But this is still an improvement compared with a year ago, when 10.1% of rents were late.

David Newnes, director of LSL Property Services, put the recent deterioration in tenants' finances down to poor wage growth.

He said: "The culprit is wages, which haven't kept pace with the rising cost of living for years."
Mr Newnes continued: "Early indications show wage expectations are starting to look up - and general inflation is under control again.

"If this can take hold, more prosperous tenants will make for a more prosperous private rented sector in 2014."

Yesterday, the Royal Institution of Chartered Surveyors (Rics) reported that demand for rented homes has been slowing amid blossoming confidence in the housing market.

But Rics also said that the shortage of homes generally would continue to push rents higher, with annual increases of around 4% expected for each of the next five years.

Rics said house sales lifted to their strongest levels in nearly six years in the run-up to Christmas.

Much of the rise in activity has been due to the return of first-time buyers to the market who are finding mortgage deals easier to come by following the launch of Government schemes such as Help to Buy.

Rents have previously seen some sharp rises due to strong demand for large numbers of would-be home buyers who found themselves trapped in the sector because they have not been able to raise a deposit big enough to make the move onto the property ladder.

Housing Minister Kris Hopkins said: "These figures from LSL back up the trend identified by the Office of National Statistics: that rents are actually falling in real terms.

"But this Government wants a bigger and better rental market. That's why we've introduced the £1 billion Build to Rent fund, which has already identified 45 potential schemes, alongside £10 billion of Government-backed guarantees to encourage more institutional investment in the sector.

"We've also announced measures that will give tenants the know-how to demand longer-term tenancies that cut costs and meet their needs. This new approach will revolutionise the way new homes are built for the rental market, provide more choice and quality for tenants, and increase competition between landlords offering decent, reasonably priced accommodation."

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