Two and three bedroom properties see the greatest increase in average monthly rent
• Average yields drop 0.1% in May although increase in the East of England and Scotland • Rent arrears fall in all regions apart from Scotland and East of England • Average monthly rent increases 4.9% in Wales, the greatest out of all regions
Analysis from the UK’s largest lettings agency shows that yields remain strong despite a decrease of 0.1% in May. Yields declined in all regions apart from East of England where they have increased 0.2% to 6.2% and Scotland where they increased 0.1% to 5.8%. Yields remained the same in the South West and the Midlands at 5.7% and 6.5% respectively. The greatest yields are being achieved in Wales at 6.6%, the Midlands at 6.5% and the North at 6.4%.
Average Monthly Rents:
Two and three bedroom properties saw the greatest increase in average monthly rent, with a 0.5% and 0.3% month-on-month increase to £770pcm and £884pcm respectively. The average monthly rent for one bedroom properties was £674pcm, a decrease of 0.6% on April and for four plus bedroom properties it was £1,363pcm, a decrease of 2.1% on April. Rent arrears: Rent arrears remained the same or fell year-on-year in all regions apart from Scotland and East of England. In Scotland they increased 4.6% and in East of England they increased 0.1%. In terms of property sizes the level of rent arrears fell for all property sizes, with three and four plus bedroom properties seeing the greatest decreases at 1.2% and 1% respectively.
Average monthly rent by region
Wales has seen the greatest increase in average monthly rent, up 4.9% on April 2013, followed by Scotland (up 2.2%), the North (up 1%) and South West (up 0.5%).
Despite some regional increases the average monthly rent in England, Scotland and Wales fell 0.2% in May, which is the first month it has fallen since January 2013, but rents are still 0.8% higher year-on-year. The Midlands has seen the greatest decrease in average monthly rents, down 1.4% month-on-month, followed by South East and Central London, both down 1.3%. Scotland has the lowest average monthly rent at £617pcm and Central London the highest at £2340pcm.
Commenting on the Index, Nick Dunning, Group Commercial Director at Countrywide plc, said:
“Countrywide’s second Monthly Lettings Index reveals that house prices are growing faster than average monthly rents in some parts of the country, resulting in a slight decrease in yields over the past month. Despite the decrease in yields in May, rental yields remain strong and are providing attractive returns for buy-to-let investors compared to other types of investment.”
The fall in average monthly rents for four plus bedroom properties reflects consumers decisions to source cheaper properties to rent to try to keep living costs down, thus demand is higher for smaller rather than larger rental properties. This is particularly true for first-time buyers who are saving for a deposit to buy their first home. However, the summer is traditionally a busy time for the lettings market as demand for rental accommodation picks up, with many perspective tenants wanting to move in and be settled by September.
Whilst in May supply for rental properties and demand was more balanced, the average monthly rents are likely to rise over the summer months as demand increases during this period.”
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