Asking rents increased by 0.7% in March to £820pcm from £814pcm in February, reveal the results from the latest FindaProperty.com Rental Index
Average rental values are now just 0.8% (£7pcm) lower than a year ago (£827pcm). The supply of properties available to rent fell 4.2% in the last month and 7.6% since January. Properties let within 57 days in March – 2 days faster than last month. Gross rental yields remain steady at 4.5%. Five of the eleven UK regions experienced a monthly increase in asking rents, with the highest being in the South East (+2.3%), both Yorkshire and the Humber and Wales remained stable while the remaining four regions experienced a decline.
Asking Rents Rise Again
March saw the second consecutive month of rising asking rents, which are now £16pcm higher than in January, and at £820pcm are now at the same level as in December last year. The annual rate of decline has reduced, with the year-on-year change now standing at just -0.8%, the lowest annual decline since the index began. Rents sought by landlords are now just £7 lower than a year ago.
Further Tightening Of Supply In Rental Market
The firming of rents has been underpinned by a reduction in the availability of rental properties on the market, which are now at the lowest level since October 2008. This is in marked contrast with an oversupply of rental properties for the majority of last year when the market was flooded with new rental properties by sellers who were unable to sell: “accidental landlords.”
These accidental landlords, encouraged by rising prices and strong demand, are now returning to the sales market, a major cause for this tightening of stock levels.
Tenant Demand Is Strong
The latest RICS Lettings Survey shows that tenant demand remains positive with 16% more respondents seeing demand rise rather than fall. Would be first-time buyers, unable to get a foot on the property ladder, are still a major source of increasing demand for good rental properties.
Even-footing Between Landlords And Tenants
The lower level of stock and strengthening of rents is an indication that the rentals market is gradually returning to equilibrium. With less surplus stock and rents now starting to rise modestly, there is more balance between landlords and tenants, and less scope for either party to dictate the terms of a tenancy.
Rents Increase For Both Property Types
The supply of houses available to rent fell 6.9% in March to the lowest level since August 2008. This pushed rents for this type of property up 0.7% to £846pcm. The stock of flats to let also fell this month, by 2.7% and is at its lowest level since December 2008. This has pushed asking rents for flats up 0.8% to £767pcm, the highest they have been since February 2009.
Mixed Picture In The Regions Led By The Supply/Demand Imbalance
There remains a mixed picture in the regions with five showing increased asking rents, two remaining stable and the remaining four with declines. However, this regional variation is very much down to the current supply-demand imbalance specific to each area of the UK.
Nigel Lewis, property expert at FindaProperty.com, commented:
“The rental market is settling down following two years of turbulence. While rents are still a long way off the peak of £873pcm in March 2008, they are slowly rising as a lack of homes for rent coupled with strong demand begins to drive higher returns for landlords over the course of the year.”
Strong Rental Recovery In The Capital
Asking rents rose 0.7% in London in March, the seventh month of steady or rising rents. Rent levels are now 2.1% higher than they were 12 months ago. This rise in rental values can largely be attributed to the exit of accidental landlords and surplus stock from the market.
Supply in the capital has been steadily declining following the severe oversupply last summer, with the number of properties available to rent now 31% lower than in August 2009.
Nigel Lewis, property expert at FindaProperty.com, commented:
“London continues to lead the overall national recovery in the rental market, with seven months of rising or stable rents. The sustained tightening of supply, coupled with the difficulties in getting onto the property ladder for first-time buyers in the Capital means that rents are likely to continue increasing in the coming months.”