In its latest buy-to-let index, LSL revealed that rent prices have risen to £698 per month, 3.1% higher than the same time last year, following eight consecutive months of rises.
David Brown, commercial director of LSL, said: “Landlords have seen tenant demand continue to hit new heights. The mortgage market remains tight and many buyers simply cannot get the finance to get a foot on the property ladder.”
He added: “As a result, demand for rental accommodation is increasing, and supply is not rising enough to match it. This has turned the buy-to-let market into a landlord’s market, and many renters face increasing rental costs while they delay their house purchase.”
The resurgence in rents has been driven by a strong performance from London and the South East in 2010.
In September, London rents hit their highest on record with landlords increasing their rents by 1.1% to £972 per month. They have risen by 6.8% since January. Rents in the South East rose by 0.9% in September.
Brown added: “There is an acute lack of affordable housing in London, and would-be buyers cannot meet higher house prices – or get big enough mortgages.
“With rental properties so sought after in the city, landlords have been able to continually hike rents since January. In the last twelve months, the average London landlord would have made an annual total return of nearly £34,000 on a typical rental property.”
However, the chairman of the National Landlords Association (NLA), David Salusbury said: “Research by BDRC Continental has shown 58% of landlords did not increase their rent in the last 12 months and a further 12 per cent actually decreased it. The survey also found more than two-thirds of landlords have no plans to increase rents over the next three months.”
He added: “The reality facing the sector is one of VAT increases, expected interest rate rises and a current lack of mortgage finance, all of which landlords have to cope with.”
However, the rise in rents means that an investor buying property could now expect a total annual return of 9.2%, the equivalent of £15,592 on a typical rental property.
Over the past year, the average UK landlord has made a total annual return of 10.4%, or£16,567.
