“Rather than measure average rents on a year-by-year basis, it’s much more useful to track current rents from the highs and lows of the market,” says Kate. “Belvoir’s figures show that since the September 2008 height of £709, rents slipped to a low of £674 in July 2009 (-5%), and rose to £697 in 2010. The average rent for 2012 is around £683 per month. This suggests that rents are still down by around 3.5% versus the heights from four and a half years ago.”
Analysis of Belvoir’s rental index shows that from a tenant’s perspective this is a good time to rent. “Stock remains tight and when this happens, rents are likely to go up or decent properties are tougher if not impossible to find,” explains Kate. “For those new to the rental market, the sooner they secure a property and a good rental record, the more likely they are to be able to stay in the property without having to pay higher rents for the next six to twelve months. If a tenant does have to move, they will have a good track record of paying rent regularly so it’s easier for them to secure another property.”
“From a landlord perspective, it is important to track rents over time, especially if they are letting property to create extra income for retirement,” Kate continues. “Our analysis shows that on average, although in the long term rents tend to keep up with inflation, since the credit crunch they haven’t been able to do so and rents, on average, are 3.5% below what they were in 2008, despite inflation running at over 3% per year. To ensure income isn’t eroded, landlords need to find ways to increase their rents in line with inflation. To help, landlords can visit their local Belvoir office to find out how to maximise rental income now and into the future.”
A rental review of the 137 offices that Belvoir is now monitoring shows that rents are stable and only a handful of offices are seeing any rent rises or falls. This is backed up by anecdotal reports from Belvoir offices who say tenants are struggling with little or no wage rises and are therefore making more of an effort to negotiate rental deals.
Although there is little evidence of change in rents this year on a month-by-month basis, any national average figures really hide what’s happening at a regional level. Rents have grown in areas such as London, the North East, South East and South West over the last five years, but rents in areas such as East Anglia and Yorkshire haven’t recovered to the heights of 2008.
Statistics show that regionally, five out of the 11 regions Belvoir track have recovered to rents above the heights of 2008. London looks like rents have gone up dramatically and indeed rents are higher on a like for like basis, but not as much as the 35% suggests. Scotland looks like it’s not performing at all well, but this is a statistical anomaly, which will be redressed in May’s data and is due to more offices coming on board. Like for like rents are pretty static.
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