Rent rises fall back as tenants buy

Rent rises have fallen back to their slowest annual pace in four years as more people continue to make the jump on to the housing ladder, a major lettings network has reported.

Rent rises have fallen back as tenants move out to buy
Rent rises have fallen back as tenants move out to buy

The average rent across England and Wales has increased by just 0.9% over the last year to reach £741 per month on average in March, according to LSL Property Services, which owns chains Your Move and Reeds Rains.

Meanwhile the proportion of tenants' rent which is late or unpaid has dropped back from 8.5% a year ago to 7.8%, in further signs that household finances are improving.

LSL said landlords have also been encouraged to invest in more buy-to-let properties, which is helping to widen the choice for tenants.

The latest annual rise in rents reported by LSL is well below the Consumer Prices Index (CPI) rate of inflation, which also dropped to a four-year low of 1.6% in March as the squeeze on people's living costs continues to ease.

The gentler pace of rental inflation coincides with more buoyant activity in the housing market. More would-be buyers have been flooding into the housing market amid rising consumer confidence about the economy generally and Government support schemes such as Help to Buy, which have made it easier for people with deposits as low as 5% to get a foothold on the property ladder.

Some experts have also raised concerns that rising house prices are making some people feel under pressure to jump on to the property ladder.

On a monthly basis, rents fell by 0.2%, leaving rents in England and Wales around £1 lower than in February.

The strongest annual rise in rents was recorded in the South West, where a 5.2% increase pushed average rents there to £664. The east of England has seen the sharpest fall, down by 3.6% over the course of twelve months and taking typical rents there to £713.

Rents in London have lifted by 1.3% over the last year to reach £1,121 on average, while rents in Wales have fallen by 2.0% annually to around £556.

David Newnes, director of Reeds Rains and Your Move, said: "Mortgage lending is recovering steadily - and the impact is becoming clear.

"This year is seeing access improve across all areas of the property market, and that now includes private renting.

"A flow of investment from landlords has increased supply of homes to let, supported by historic low mortgage rates and significant growth in the number of buy-to-let loans.

"At the same time more first-time buyers are starting to balance the many thousands of new tenants entering the rental market a nd this is slowing demand a little. The result is a private rented sector where supply and demand are more aligned than for many years. More mortgage lending is good for tenants too."

The report is based on rents achieved on about 20,000 properties.

Housing Minister Kris Hopkins said: "Today's figures clearly show how our long-term economic plan is working, with more properties being made available to rent, meaning more choice for tenants and average rents down compared to last month.

"But we're far from complacent and with millions of people renting privately we're working to expand the sector even further."