Average UK rents up by 0.6% in April

The average rent in the UK rose by 0.6% to £663 per month in April, 2.2% higher than a year ago, according to the latest Buy-to-Let Index from LSL Property Services, which owns the UK’s largest lettings agent network, including national chains Your Move and Reeds Rains.

Rents have risen for the third successive month and are now just £25 per month lower than their peak in August 2008. Yields on buy-to-let property rose to their highest level all year at 4.8%, as rent increases narrowly surpassed slowing house price inflation.

The monthly increase in house prices for the average rental property slowed to 0.4% in April – a drop from the 2.1% increase seen in January. 

The total return from investing in buy-to-let over the last twelve months reached 12.8%. The average landlord would have made £19,765 in the past year, £7,115 in rent, and £12,650 in capital appreciation. This is the fourteenth consecutive month that annual returns have improved.

Improved annual returns have been supported by a second consecutive month of strong performance from tenant arrears. £220.3m of all rent in the UK was unpaid in April, a drop of £7m from March. This represents just 9.7% of all rent, the lowest figure since LSL Property Services plc began compiling the figures two years ago.

David Brown, Commercial Director of LSL Property Services plc, says: “Despite the distraction of the election, the buy-to-let market has gone from strength to strength, and landlords have seen their highest rents and yields this year. The UK’s political uncertainty surrounding the hung parliament – and its potential impact on the economy – will continue to depress demand for house purchase. With transactional levels subdued, the private rental sector will play an even more pivotal role in providing accommodation for hesitant buyers, and we expect tenant demand and rents to be boosted in the medium-term.”

Brown adds: “Not only has the buy-to-let market emerged from lingering effects of the recession, but landlords are now within touching distance of the record rents they achieved before the downturn. Supply and demand imbalances have corrected, and landlords are now getting a few pounds less each per month than they did at the peak of 2008.”