Rents dropped in February sparking a debate on whether the tide is beginning to turn against landlords who have reaped increasingly higher sums over the past 12 months. The average rent in England and Wales is now £707 a month after a 0.6 per cent drop, according to the LSL Property Services index. Tenants are still paying £24 more a month than they were a year ago.
What prompted the fall in rents?
LSL blamed the drop on the rise in the number of tenants rushing to buy their first home before the end of the stamp duty holiday on March 24. After that, first-time buyers will pay 1 per cent on the purchase of property priced between £125,000 and £250,000.
Are the latest falls just a blip then?
David Newnes, executive director at LSL, does not think the fall will last for long. “There are already indications that mortgage lending is falling back and that rates are beginning to climb,” he says.
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Should tenants expect bigger bills?
Not necessarily. Chartered surveyors expect rent rises to slow down. Research by the Royal Institution of Chartered Surveyors (RICS) suggests tenants are unwilling or unable to pay more.
What about London?
The capital is not immune to change. RICS data shows that last month’s rent increase in the capital was the most modest since mid-2009. The number of rental properties has risen by 30 per cent giving tenants more power to negotiate.
Will more landlords sell?
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As rental growth slows in many parts of the country, 4 per cent of landlords put their property on the market in the three months to January, a jump from the previous quarter’s figure of 2.6 per cent, according to RICS.
How will property investors fare?
Strengthening house prices have bolstered total annual returns in property. LSL figures show that the average yield on a rental property is now 5.2 per cent compared with 5 per cent a year ago. According to LSL analysis, the average investor in England and Wales can expect to make a total annual return of 8.7 per cent per property over the next 12 months.
What next for buy-to-let?
Government figures show that the gap between those renting privately and people living in social housing narrowed to just 200,000, from more than three million 30 years ago. Ludlowthompson, a London letting agent, estimates that more people will be living in private rented accommodation than in social housing by the end of the year.