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Rents rise for first time in February

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  • 18/03/2011
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Rents rise for first time in February
Rents rose for the first time this year in February, according to the latest buy-to-let Index from LSL Property Services.

In February, the average rent in England and Wales rose by 0.2% to £684 per month, with rents 3.9% higher than in February 2010.

The average yield increased to 5% in February, as the rent increased at a faster pace than rental property values during the month.

Although London recorded a modest increase in rents of 0.3% compared to January, rents have now risen by 7.7% in the last 12 months, almost twice the national average and reflecting the especially tight market in the capital.

The greatest monthly increases were in Wales, where they rose 1.9%, the North West and the East Midlands, where they rose 1.1% and 0.8%.

The biggest decreases were in the North East, where rents fell 1.4%, Yorkshire and the Humber and the South West, where they fell 1.2% and 1%.

David Brown, commercial director of LSL Property Services, said: “The consistently constrained level of lending to home buyers has bolstered demand and rents in the private rental sector during what is typically a slower period.

“Around 158,000 fewer first time buyers were unable to enter the market in the last 12 months, compared with three years ago. With the mortgage market even more sluggish since the start of 2011, this backlog of frustrated buyers has increased even further and rents have risen correspondingly.”

The total annual return on a property stands at 3.9% as the slight fall in property prices over the course of the past year has been counteracted by a strong annual growth in rents.

The total annual return is now the equivalent of £5,730 – £7,317 in rent, with a capital loss of £1,587.

Brown added: “Over the past year, extremely strong rental income has underpinned landlords’ annual returns. With house prices unlikely to rocket up as the year progresses, rents will continue to provide the lion’s share of returns for property investors.”

Tenant finances continued to deteriorate in February, with 12.6% of all UK rent unpaid or late by the end of February, an increase from 11% in the previous month.

Unpaid rent totalled £296m across the UK in February, up from £258m in January.

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