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Average residential rents reach all-time high in England and Wales

Average rents in England and Wales reached an all-time high of £846 in July 2016 and are now up 5.2% year on year, according to the latest index.

Annual growth was led by the South East with a rise of 14.9 % over the year and according to the Your Move buy to let index this suggests that people are moving out of London.

The index data also shows that rent were 4.4% up on the £810 recorded in June 2016, suggesting the UK’s decision to leave the European Union has had no negative effect on rents.

Rent growth in the South East of England was significantly higher than anywhere else, with the typical property now commanding £924 per month, almost 15% higher than a year ago.

The report suggests that upward pressure on the market in the South East could be a result of tenants looking further afield to offset high London rents. While July’s average of £1,273 is higher than the previous month’s figure of £1,225, the market in the capital is down 0.7% year on year.

Indeed, London was the only area of England and Wales to post an annual fall and remains below the £1,301 recorded in September 2015. London still remains home to the highest rents at £1,273, well ahead of the South East at £924 and East of England at £857.

A breakdown of the figures shows that outside of the South and East of England there is not a huge divergence in rents. The average in the South West is £686, in the East Midlands £620, in £618 in Wales, £617 in the North West, £599 in the West Midlands, £567 in the North East and £565 in Yorkshire and the Humber.

According to Adrian Gill, director of lettings agents Your Move, the recent slowdown in rent rises may have come to an end. ‘The UK’s vote to leave the European Union has not caused any immediate change in the rental market, although we must wait for longer term trends to develop,’ he said.

‘For landlords, market sentiment remains positive with the vast majority still looking to add to their portfolio of properties, despite the Brexit vote. The South East was home to the biggest leap in rents, with many Londoners moving further afield in an attempt to escape high rents in the capital,’ he added.

The report also shows that the average gross rental yield for properties in England and Wales continues its general downward trend and, while slightly up on June’s figure of 4.4%, the 4.5% recorded in July 2016 is still below the average yield of 5.1% recorded in the same month last year.

The North East had the highest yield at 5.5%, despite being home to the lowest house prices in the country. A typical property in the region was valued at £118,821 in July but comparatively high rents pushed yields higher than anywhere else. In June the region had recorded yields of 5.1%.

Both the East Midlands at 5.8% and the West Midlands at 5.7%, saw some of the strongest yields in the country. However one year later the typical yield has dropped to 4.3% and 4.1% respectively.

London saw the smallest yield for landlords, at 3.2%, and is home to the highest house prices in the survey. But this figure has dropped from 4.5% a year ago, suggesting a tightening in the London rental market.

Tenant finances rose slightly in the month of July. Across England and Wales some 9.01% of tenancies had arrears of a day or more, slightly higher than the 8.43% recorded in June, but lower than 9.3% in May.

However, looking at the longer-term, the proportion of tenants in arrears remains well below the all-time high of 14.6% recorded in February 2010. On an absolute basis, the number of households in serious arrears, defined as two months or more, was 36,314 in July 2016. This compares with 36,207 cases in the previous month.