The shortage of decent rental properties is continuing to drive up rents across England. Although there has been an increase in rental stock, 31 per cent of landlords and agents have seen rents go up in June, according to the Association of Residential Letting Agents. In the past 12 months, the supply of rental stock has gone up by eight per cent, with demand falling slightly. However, there is still an acute shortage of properties in areas of high demand. This, coupled with the tax changes for landlords, may account for the hike in rents. About 20 per cent of landlords have said they plan to increase rents because of the introduction of the three per cent stamp duty surcharge, coupled with tax relief being phased out. ARLA chief executive, David Cox, said there needs to be a balance between supply and demand, to prevent rent prices from increasing too much.
The average rent in England and Wales went up by 1.6 per cent between May and June, according to the Your Move England & Wales Buy to Let Index. That means the average rent is now £827 a month. The biggest increases were in the North West and West Midlands, with a 0.3% increase in June. However, the average rents in these areas are below the national norm, at £629 and £609 respectively. Wales had the fastest growth in rent on an annual basis, with prices going up by 7.2 per cent in the past 12 months. However, it is still cheaper to rent there than in many parts of England, as its average rent is £599 a month. The East of England had the next strongest growth, with an average rent of £872 a month – up 3.6 per cent on the previous year.
Two regions actually saw prices go down. In the South West, the average rent was £664 – down 2.6 per cent on the same time last year. London also saw prices reduce, but it still remains the most expensive place to rent property in England and Wales. The average rent in the capital was £1,277, which is 1 per cent down on the previous year.
For landlords, the best places to invest are in the North East and North West, with yields of 5.23 per cent and 5.01 per cent respectively. These remain stable areas in terms of yield and demand, while property prices are also much more reasonable than many parts of southern England.
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