Kate Faulkner's Summary and Analysis of Latest Rental Market Reports

publication date: Apr 11, 2013
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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Kate Faulkner's Latest Summary and Analysis of Rental Reports

There are five regular reports on the rental sector, some cover the UK and some cover just England and Wales. Here is a summary of the report headlines and latest data together with Kate Faulkner’s comments below to help landlords and tenants understand the implications of these reports for them:-

Report headlines:-

Homelet xx “The difference between renting a home in the Capital and rest of UK is highest on record.”
Acadametrics/LSL “February rents fall to £731 but pace of decline slows”
Belvoir Lettings “Average rents across the UK for February 2013 were £2 more than February rents in 2012 for offices which have traded consistently over the last five years”
Spare Room “Weekly room rents have increased 7% between February 2012 and February 2013, from an average of £107 to £114 across the UK. Amongst the big cities that experienced large increases, we've seen Edinburgh rents up 6% and Bradford rents up 7%, whilst Aberdeen rents soared by 11%.”

Average Rents

Average Rents

Kate Faulkner comments:

“In the main, rents are relatively static bar a few areas, such as London which have seen an increase, albeit still lower than inflation over the last few years. Overall, rents are either static or showing slight falls versus 2012.”

Capital Growth for Landlords

LSL xx “The total annual return on a rental property rose to 6.2% in February. This represents an average return of £10,144 with rental income of £7,622 and a capital gain of £2,522. The average yield on a rental property was 5.3% in February, compared to 5.2% in the same month last year.
Nationwidexxxxxx “For the second month in a row UK house prices remained flat in annual terms, maintaining the trend of broad stability that has been evident over the past two years”

Kate Faulkner comments:

“As rents have stayed flat and capital growth, apart from a few hotspots around the UK, is pretty static nationally, average returns haven’t changed that much either.”

Demand for Rented Properties

Homeletxxxxxxxx xx “Regulation within the industry could improve consumer confidence within the rental market and encourage even more people to rent a home.”
LSL “The rental market hasn’t yet burst into life, but we’re seeing more vitality than last year’s timid February market, when tenant demand was impacted by the rush to buy homes before the stamp duty deadline. However, this February has also seen a more vibrant sales market reduce the strain on the private rented sector during its sluggish off‐peak season.”
ARLA “During the last three months of 2012, demand in the rented residential property sector has seen little change in terms of the overall proportion of respondents saying that there are more tenants than properties available for them, with the figure falling only marginally from 55.4% to 54.8%. This overall small decline was accounted for by a fall for Prime Central London (down from 39% to 34%) and the Rest of the UK (down from 55% to 52%). The comparative figure for the Rest of the South East was up from 66% to 70%.”

 Kate Faulkner comments:

“Demand for rental properties remains buoyant. However, gone are the days where a rundown property could be rented to anyone easily. Even with demand high, tenants would still prefer to wait for a decently maintained property, and even pay a bit more, than they would rent something which has mould or is out of date.”

Supply of Rental Properties

ARLAxxxxxxxxxxx xx “Suggesting a further move towards landlords increasing their net investment in residential property rather than decreasing it, the proportion of ARLA members who think landlords are currently increasing their net investment in residential property by buying properties has risen quite sharply from 22% to 26% over the last three months whilst the proportion who   think they are currently decreasing their net investment by selling properties is down from 12% to 10%. The margin between the proportion saying landlords are buying and those who say they are selling is now at its widest since the second quarter of 2010.”
LSL “In the longer‐term, the supply of rental homes will have to increase considerably to prevent monthly rent rises when the rental market re‐enters its traditional peak season.”

Kate Faulkner comments:

“This year will be an interesting one for rents and property supply. We’ll see if rents have now stabilised, as tenants just can’t afford to pay more due to a lack of an increase in their wages and disposable income, helping us to understand and predict rents better in the future. Secondly, towards the end of the year we’ll hopefully start seeing what impact, if any, build to rent programmes may have on supply.”

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