Rents are on the riseAverage monthly rents hit £713 a month

19 September 2011

House for rent sign

Renters feel the squeeze as rents rise by their fastest rate in a year

Rents rose by 1.2% in August, according to the latest Buy-to-let Index from LSL Property Services plc, with average rents in England and Wales hitting £713 per month, up from £705 in July.  This is the largest monthly increase since August 2010.  

Rents have been rising as frustrated buyers, unable to raise the deposit required and secure a mortgage, turn to renting instead. 

The increase in rents in August has been further driven by recent graduates moving for their first jobs.

David Brown, commercial director of LSL Property Services said: "In the last two years, average rents have risen by more than £50 a month. With significant improvement in the number of buyers able to secure a mortgage unlikely in the foreseeable future, competition for rental accommodation will not drop and further rent rises remain on the cards". 

If you're looking to rent, take a look at our Which? guide to renting which covers how to find the right property to rent, questions to ask when viewing a property and information about tenancy deposit protection. 

Rent increases good news for buy-to-let investors

While renters feel the pinch as rents rise, buy-to-let investors are benefiting from increases in rental income. 

In the last year, London has seen stronger rental inflation than other regions of England and Wales, with rents hitting a new record high of £1,025 per month in August.  This is an annual growth of 6.6% - equivalent to £63 per month.  

The next biggest annual increases were in the West Midlands, where they rose 6% and the North East, where they increased by 4.3%.  In the last year, average rents have risen in all regions except Yorkshire and the Humber, where they have fallen by 0.5%. 

Total annual returns on rental property improved in August after annual decreases in property prices slowed.  

The average total annual return in August was 2.6%, the equivalent of £4,336-£7626 in rent, with a capital loss of £3,290.  

If property values maintain the same trend as the last three months, a property investor could expect to make a total annual return of 10.5% over the next 12 months - equivalent to £17,.381 per property, according to figures from LSL.  

More on this:

If you're looking to let a property - Which? guide to letting a property

If you're looking to rent - Which? guide to renting a property

If your landlord has increased the rent - Which? Guide to your rights