Countrywide Monthly Lettings Index – July 2013

Residential Lettings

Wednesday, August 14, 2013

Rents grow to the highest level for over 2 years

• Yields remain strong with the highest yields being achieved in Wales at 6.6%
• Average monthly rents increase year-on-year for all sized properties apart from 4 plus bedroom properties, down 5.5%
• Average monthly rents increase 5.2% in East of England, the greatest increase per region
• Rent arrears fall in all regions apart from Scotland and Central London

Yields: Analysis from the UK’s largest lettings agency shows that yields remain strong in July with the average yield 6.1%.  Yields remained the same in all regions in July when compared to June, with the greatest yields being achieved in Wales at 6.6%, Midlands at 6.5% and North at 6.4%.

Average Monthly Rents: Four plus bedroom properties saw the greatest increase in average monthly rents in July, with a 3.8% month-on-month increase to £1,471pcm, despite falling 5.5% year-on-year. Two-bedroom properties saw an increase of 1% to £787pcm, followed by three-bedroom properties up 0.9% to £898pcm and one-bedroom properties up 0.8% to £689. All sized properties saw a year-on-year increase in average monthly rents apart from four plus bedroom properties.

Table A: Variations in rents, yields and arrears data in England, Scotland and Wales for property sizes 

Bedrooms

July 2013 Average rent

June 2013 Average rent

Rent month-on-month increase

July 2012 Average rent

Yield %

Rent year-on-year increase / decrease

Arrears >30 days YTD 2013

1

£689

£684

0.8%

£658

6.8%

4.6%

6.3%

2

£787

£780

1.0%

£764

6.4%

3.0%

5.9%

3

£898

£890

0.9%

£872

6.1%

3.0%

7.0%

4+

£1,471

£1,417

3.8%

£1,556

5.4%

-5.5%

6.8%

Total

£866

£854

1.4%

£852

6.1%

1.6%

6.4%

Average monthly rent by region
The average monthly rent in the UK increased 1.4% in July to £866pcm, the highest level for more than two years. East of England saw the greatest increase in average monthly rents up 5.2% month-on-month, followed by Wales up 5% and South East up 4.3%. Despite some regional increases the average monthly rent fell in Central and Greater London and Scotland, with Central London seeing the greatest decrease down 2.8%. Scotland has the lowest average monthly rent at £636pcm and Central London the highest at £2,414pcm.

Rent arrears: Rent arrears fell year-on-year in all regions apart from Scotland and Central London. Average monthly rents are up 6.2% year-on-year in Scotland but arrears are also up 4.1%.  In Central London rent arrears increased 0.2%.  In terms of property sizes the level of rent arrears fell for all sized properties, with three and four plus bedroom properties seeing the greatest decreases at 1.2% and 1% respectively but this would be fair as average monthly rents for these properties are higher.

Table B: Variations in rents, yields and arrears data in England, Scotland and Wales for regions

Region

July 2013 Average rent

June 2013 Average rent

Rent Month-on-Month increase / decrease

July 2012 Average rent

Yield %

Rent year-on-year increase / decrease

Arrears >30 days YTD 2013

Greater London

£1,113

£1,124

-1.0%

£1,084

6.2%

2.7%

6.9%

Central London

£2,414

£2,484

-2.8%

£2,632

4.8%

-8.3%

7.4%

East of England

£844

£802

5.2%

£835

6.2%

1.0%

6.8%

South East

£1,105

£1,060

4.3%

£1,118

5.9%

-1.1%

5.1%

South West

£772

£746

3.5%

£760

5.7%

1.6%

4.6%

Midlands

£659

£644

2.3%

£626

6.5%

5.3%

6.2%

North

£636

£635

0.3%

£613

6.4%

3.7%

6.9%

Scotland

£635

£636

-0.1%

£598

5.8%

6.2%

8.9%

Wales

£656

£625

5.0%

£624

6.6%

5.2%

6.3%

Total

£866

£854

1.4%

£852

6.1%

1.6%

6.4%

Commenting on the Index, Nick Dunning, Group Commercial Director at Countrywide plc, said:

“Countrywide’s Monthly Lettings Index reveals that the cost of renting continues to be higher in relation to the cost of monthly mortgage payments, with the average monthly rent now £866pcm. According to recent data from the Council of Mortgage Lenders, lending to buy-to-let landlords is now at its highest level for nearly 5 years. However, despite more competitive buy-to-let mortgages encouraging investors to expand their lettings portfolios and increase the supply of rental accommodation on the market, we have on average 4-5 tenants for every rental property we are marketing. Rental values are being underpinned by the increasing number of people living in the private rented sector and rents are likely to continue rising unless supply and demand becomes more aligned.

-Ends-

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