Rents increased across England apart from London and the South West in the 12 months to February 2017 with Wales seeing rental values rise twice as fast as elsewhere, the latest index shows.
This took the average rent in England and Wales to £798 per month with the growth led by the South East and the East of England, up 3.4% and 5.6% year on year.
While London still has the highest rents at £1,280 this is 1% lower than February 2016 and down 0.5% month on month, according to the data from the Your Move buy to let index.
The index report suggests that London has now reached an affordability ceiling and renters are now looking outside the capital for properties. Indeed, the counties surrounding London have seen rents increase rapidly over the last year as people move to these areas instead.
The average rent in the East of England is now £868, although this is down 0.2% month on month while in the South East it is £878, up 0.1% month on month.
However, it was in Wales where the fastest rising rents were recorded, up 7.7% year on year although with average monthly rent of £593 per month it is one of the cheapest places to rent. The North East at £545 a month and Yorkshire and Humber at £566 are the only regions with cheaper rents than Wales.
Rents are also down year on year in the South West with a fall of 1.5% during the past 12 months to £662. The report suggests that there is a surplus supply of property for tenants which can cause rents to fall as landlords lower rates to suit the market.
‘The dramatic rent increases in London have now slowed as people look outside the capital in order to meet their housing aspirations. Areas in the South East and East of England have traditionally offered much better value than the capital and this has tempted many Londoners to look further afield for rental properties,’ said Valerie Bannister, lettings director of Your Move.
‘Renters in London could be reaching the limits of their affordability as prices dropped back 1% in the last year. This will be one to watch as the year progresses,’ she added.
The index also shows that yield levels have continued to trend downwards over the last year with a typical figure of 4.1% across England and Wales in February, down slightly from the 4.2% recorded in January.
Places with higher house prices continue to have the smallest yields and these are typically in the areas closest to London while in the capital itself the average yield was 3.2%, down from 3.6% a year ago but flat month on month.
In the South East the typical yield was 3.4%, down from 3.7% in February 2016, while in the East of England yields were down from 4.4% to 3.9% in the same period while landlords with properties in the South West also saw returns below 4%, down from 3.7% to 3.4% during the last 12 months.
‘At the other end of the scale, properties located in the North East enjoyed the biggest yields at 5.3% but slightly down compared to last year while in the North West the typical yield was 5%.
Tenant arrears fell in February to 8.1% from 9.1% in January 2017 and 8.7% in December 2016. The report says that the long term trends continue to be encouraging with the proportion of tenants in arrears remains well below the all-time high of 14.6%, recorded in February 2010.
