Kate Faulkner's Rental Summary for May 2014

publication date: Jun 6, 2014
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

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What happened to the rental market in May 2014?



Every month we do summary of the various rental indices to help you understand what’s really happening to rents both nationally and at a regional level.

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Rental Indices Headlines 
Although the headlines might seem a little dramatic, the reality is rents are typically pretty stable from one month to the next.

  • Move with Us “Rental prices hit record levels in the South East. (Apr 14 – England, Wales & Scotland)”
  • Belvoir Lettings “Average rents for all offices trading over the last five years in April 2014 were £685, with no change from March 2014. (Apr 14 – England, Wales & Scotland)”
  • Acadata/LSL “Rent rises drop to less than half inflation. (Apr 14 – England & Wales)”
  • Homelet “Rents in London increase to highest amount on record. (Apr 14 – England, Wales & Scotland)”

What’s happening to average Rents Nationally?
Below we track rents over the last year from the three main indices. Homelet includes quite a lot of
rents from London, so it’s typically higher than LSL and Belvoir and may tend to show more of an upward trend. LSL doesn’t cover Scotland which both Belvoir and Homelet do.


Rental Indices

Kate Faulkner’s comments on latest rental indices trends
“Looking at the various indices, it appears those that have a generally national presence, so aren’t dominated by London, show rents are pretty static just now, despite the rise in property prices. Most people don’t realise that price movements and rents often go in the opposite direction, but as prices rise due to higher demand, the future looks bright for renting, as it means renting becomes increasingly affordable versus buying, especially if tenants need to maintain flexibility.”


What’s happening at a regional level?
As with property prices, rents vary from one region to another and so do the trends. Here’s a summary of what’s happening in each region, according to the main indices:-

Move with Us “The strongest performing region in April was the South East. Rents increased by £19, equivalent to 1.71% and the 12 month comparison shows that the average advertised rent outstrips last year’s by £79 (7.13%). London’s market position remains strong despite the £6 reduction in the average advertised rent this past month. With an average advertised rent of over £2,250, minor fluctuations are to be expected but should not be considered to have any detrimental effect. The general trend for rents in the capital is one of growth. Rents in Yorkshire & Humber fell by £20 in April. This drop follows the national trend as most regions have seen a readjustment following steady increases during the first few months of the years. (Apr 14)”

Belvoir Lettings
“Feedback from the offices suggests that the regions of East Midlands, East Anglia and the North West are still recovering to the rental heights of 2008, rents in the North East and Yorkshire remain level at 1% above the height of 2008.The West Midlands, South East and South West are the areas where rents continue to remain above the 2008 heights. In London, the average rent in April 2014 was £1,424 per month, 18% above the high of 2008. (Apr 14)”

Acadata/LSL “Rents in six out of ten regions are higher than a year ago. The fastest annual increase is in the South West with rents up 4.3% since April 2013. This is followed by a 3.2% annual rise for the East Midlands and a 2.4% increase in the North West compared to twelve months ago. London, Wales and the South East have all also seen rents rise, though more slowly. Rents are up by just 0.6% in all these regions since April 2013. On a monthly basis, four out of ten regions have seen rents fall. Between March and April the South West has seen rents drop 0.7%. This was followed by a 0.4% dip in London rents, while rents in both the North East and East of England have fallen by 0.1% since March this year. By contrast, Wales has seen the fastest monthly rent rise of 1.1%, followed by a 0.9% monthly increase in both Yorkshire & the Humber and in the West Midlands. (Apr 14)”

Homelet “Wales was home to a fourth consecutive monthly decrease in average rental amounts. After decreasing by 2.6% during April, it now costs an average of £565 per month to rent a home in the region. Average rental amounts in the West Midlands increased by 1.7% during April to £602 per month – the region’s first rise in rents this year. The South East is the only region to see three consecutive monthly increases in average rental amounts. It now costs an average of £858 per month to rent a home here. Yorkshire and Humberside and the North East are the only two regions to see annual decreases in average rental amounts of 3.4% and 3.5% respectively. (Apr 14)”

 

Kate Faulkner comments on Regional Rent Variations: 
“As with house prices, the regional picture is mixed. For those looking to invest in buy to let now, you have to spend some serious time crunching the numbers to make sure a property stacks up financially. BTL investors would be wise to appreciate it’s mainly capital growth over a long time period where BTL often delivers best. To really earn money from income these days, you are likely to consider Homes in Multiple Occupation and then you have to look at the net income – not gross yield. It’s essential to make sure you are clear about how to exit your property portfolio as opposed to just how to buy and let it.” 


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