Rental prices in England and Wales up 1% year on year

The lettings market in England and Wales saw rental prices up by 1% over the 12 months to January with all regions bar one recording growth, the latest index shows.

The average rent in January was £798 in January with the East of England seeing the fastest rising rents over the year and London properties continuing to attract the highest rents.

The annual growth came despite rents dropping back slightly between December and January, according to the data from the Your Move buy to let index.

In the East of England rental prices increased by 6.9% in the year to January 2017 and now stand at £870 per month. This region also saw the fastest growth month on month with rents up 0.7% between December and January and the report suggests that the growth may have been buoyed by people living in London looking beyond the capital city in order to meet their housing aspirations.

Other areas to see strong growth included Wales where prices increased by 6.5%, in the past 12 months to reach £586 and the East Midlands which saw a 4.5% rise in rents compared to a year ago to an average of £634.

The South West was the only area to see a fall in rents in the last year. Prices in this region dropped by 1.6% in the year to January 2017 and now stand at £661. Rents did increase slightly between December and January, however.

Just two areas saw prices fall month on month with London recording a fall of 0.4% and the North West a fall of 0.1%). Despite this setback, London continues to have the most expensive properties in this survey with the average rent standing at £1,286.

‘The start of a new year brought renewed confidence for the rental market in England and Wales. Rents in nearly every region surveyed have increased compared to the same point last year,’ said Valerie Bannister, lettings director of Your Move.

But yields continue to be squeezed in most areas of England and Wales, with all regions recording lower returns than at the same point a year ago. The typical property return was 4.6% during January, slightly down on the 4.7% recorded during the previous month. This figure is also below the 5.1% yield seen in January 2016.

Yields continue to vary from region to region. Areas with lower initial purchase costs generate the largest percentage return. The North East continues to lead the way in this respect with the average property generating a 5.3% yield, the same as last month.

Houses in the North West typically gave landlords a 5% return on investment and those in Wales were also above the national average, recording 4.7% during the month. Yields in the Yorkshire and The Humber area were exactly in line with the national average at 4.6%.

London continues to have the smallest yields as properties in the capital returned 3.2% to investors in January. This is a fraction down on the 3.3% seen in December and reflects the continued high cost of housing stock in the Greater London area.

The South East and the South West had the next lowest yields, with properties in both areas returning 3.4% during the month of January. Both are flat compared to the previous month.