According to the latest figures from Your Move and Reed Rains show that rental prices in England and Wales have almost reached record highs.
On average, rents in England and Wales are now £768 per month, up 3.7% over the last 12 months.
Good news for landlords and property investors, a strong demand for rental property has pushed the cost of renting towards all-time highs. Rents are now only £2 below the record high recorded in October 2014.
What’s more, rents have risen by 15.2% since the last general election in 2010.
“Since 2010 the private rented sector has absorbed over a million extra households. With social housing in decline, alongside a parallel decay in the number of people owning their own home with a mortgage, private renting has stood in to fill the gap,” said Adrian Gill, director of estate agents Reeds Rains and Your Move.
And the future of the buy-to-let sector looks set to remain buoyant for landlords.
“Rising rents are supporting steady gross yields, in line with the long-run average of just over five per cent. And rental yields should stay steady in the immediate future, as market rents grow vigorously while property prices rise at a similar rate. However, landlords are also benefiting from steady price rises, as the bonus of capital accumulation adds considerably to total returns.
“Tenants looking for the lowest possible rents depend on landlords investing in new properties to keep up with growing demand for places to let. Yet if and when those same tenants start looking for a home to buy, they often find themselves in competition with landlords to buy a home. Again – building more homes is the only way around that dilemma. But in the meantime, healthy investment and competition between landlords should help tenants avoid excessive rent rises,” Gill added.
Highlighting the demand for buy-to-let property, one in five households across the UK is now renting. This demand may further push the cost of renting up over the next few years.