Rental yields warm up as property values cool down
Average rents in the private rented sector have risen by an average of 4 percent for houses and 2 percent for flats in the three months to the end of February.
These averages have been boosted by a 9 percent rise in Prime Central London and a 5 percent rise away from the South East. In the South East itself, rents fell slightly, by 2 percent for houses and 5 percent for flats.
These figures are seen as emphasising the start of a new housing cycle says ARLA (Association of Residential Lettings Agents).
The improvement in rents received includes an increase of well over £3,000 a year for renting a house and £1,500 for renting a flat in Prime Central London.
Rents have risen in the rest of the country too, from an average of £931 to £981 for houses and £619 to £664 for flats.
In the South East the average rent dropped from £1,390 to £1,361 a month for houses and from GBP 930 to GBP882 for flats.
In all the regions the cost of renting a house against renting a flat is around half as much again, between 48 percent and 61 percent higher.
These figures are the results of the latest quarterly ARLA Survey of its member letting agents published this week (10 March).
The Survey continues to be the largest of its kind for the rental market and it shows that falling asset prices are leading to higher yields as well as increasing rents.
ARLA Head of Operations, Ian Potter, pointed out that this quarter’s report emphasises the traditional cycle of the housing market.
He said: “We are seeing the beginning of the inevitable. Whenever property prices soften or fall, rental demand, rents and yields all increase. As we begin a year of uncertainty in the sales market, it is inevitable that our member letting agents should report that they have more tenants than properties available for them.”
Increased demand is being driven in part by immigration. Across the country, the average proportion of properties taken by immigrants through ARLA members is 20 percent. More than 16 percent of these are from the European Union.
In Prime Central London the proportion of immigrants renting is 28 percent. In the South East the figure is 21 percent and in the rest of the country the average is 15 percent.
The ease of obtaining references for immigrants is beginning to improve. Over the past 18 months letting agents in Prime Central London and away from the South East have found it significantly easier to obtain references.
However, for the South East, there has been little improvement.
Potter said: “The supply of property in the Private Rented Sector must rise if we are to provide for immigration as well as all the other sectors of our society who want to rent. These findings show also that we urgently need to find better cross-border referencing systems if we are to satisfy landlords that they are letting to good covenant tenants.”
Leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment