Overall people in England have seen rents increase by an average of £35 a month with the North East seeing a rise of £73 in the North East but Scotland seeing them fall.
Overall, average advertised rental prices stabilised at around £973 per month, the data from Move with Us shows. However, the picture at a regional level is far more mixed. In Greater London and the surrounding regions, a seasonal decline was observed in November with some evidence of rental prices softening. To the West, the trend was one of more sustained growth but sustained growth in the North East.
‘Generally, demand is increasing for higher quality rental properties and tenants who need to rent for longer periods due to more stringent mortgage requirements. Also falling house prices are sapping home buyer confidence,’ said Robin King, director of Move with Us.
The research also shows that gross rental yields remained at 5% throughout the UK in 2012 with the majority of regions returning an average yield of around 4%. Returns remained stable as both house prices and rents have increased at similar rates. Overall, this suggests that buy to let properties were a worthwhile investment in 2012.
‘Higher property prices and strong demand for rental property meant that London continues to lead in terms of yield, with returns averaging at 6.1%. However, the lower entry costs in the North East and strong yield make it an interesting alternative region for investment,’ explained King.
Yorkshire and Humber led the way with an increase of 12.1%, followed by 11.5% in the North East, and 8.8% in the East Midlands . King said that these regions have seen rents step up to a new level, with strong short term growth, followed by a period of stability.
‘This suggests that both the demand and supply sides of these regions are pushing rents up to a new market price. These growth rates look set to level off in 2013 to a more sustainable level,’ he added.
In Wales rents increased by 5.4%, by 5.2% in the North West and by 4.3% in the South West. Other regions were not experiencing the expected advertised rental price growth rates. In Greater London they increased by 2.5%, in East Anglia by 0.3%, in the South East by 3.3% and in the West Midlands by 2.3% and therefore did not keep pace with the overall trend rate.
Average rental prices fell by 0.9% in Scotland during 2012, where prices remained volatile through the year. However, on a more positive note, rents recovered by 0.7% in December, suggesting a promising outlook for 2013.
‘Most regions look set to return to the long term growth trend rate of 4.5% to 5.5% in terms of rental price inflation. This is, of course, dependant on Greater London, as it has a significant impact on the overall rate across Britain both directly and indirectly. Overall we expect to see advertised rent levels in many of the high performing regions begin to settle down,’ said King.
