rent guarantee – Rents fall for second month in a row
Rents fell for a second successive month in December, as the traditional seasonal slump impacted the buy-to-let market.
According to LSL Property Services, the average rent in England and Wales fell by 0.8% to £711 per month during December.
Yet despite the monthly decline, average rents remain 4% higher than a year earlier, thanks to tenant demand surpassing that seen in December 2010.
In the last 12 months, rents increased in all but two regions, with the fastest rising prices being seen in London (5.6%).
Rents fell in the North East and South West by 1.3% and 1.2% respectively.
Although the slight falling away of rents in December caused average yields to dip to 5.2%, a recovery in the price of rental properties in the last two months of the year meant total annual returns climbed higher.
The average total annual return per property was 3.7%, compared to 2.7% in November.
In cash terms, this was an average of £6,107, or the equivalent of £7,611 in rent with a capital loss of £1,504.
“The seasonal relief continued for tenants as rents dipped again in December, but the drop-off was much smaller than a year ago” said David Brown, commercial director of LSL Property Services.
“The rental market was sheltered from the full impact of the seasonal lull by the strength of underlying tenant demand as many prospective renters took the opportunity to move in the run-up to Christmas at a time when the market is traditionally less competitive.”
With the Eurozone crisis and faltering wider economy set to impact the mortgage market further, Mr Brown added that credit conditions are unlikely to ease significantly in the coming year.
“As a result, the number of first-time buyers able to secure finance isn’t about to rocket up, and demand for the limited supply of rental accommodation will continue to rise.
“It won’t be long before rents will resume their upward march.”
Source: http://moneyfacts.co.uk/news/buy-to-let/rents-fall-for-second-month-in-a-row200112/