What's Happening to Rents Winter 2011?
Rent Prices
The media has been full of news about dramatic rent rises since the summer of 2011, unfortunately this information though is misleading to both tenants and landlords.
Rent Rises? What Rent Rises!
Many landlords who have had tenants in place since before October 2008 are now getting a major surprise when on the one hand the media is saying rents are rising, on the other hand, letting agents or tenants are offering less rent, despite inflation running at nearly 5% per year!
The reason for the disparity between ‘shocking headlines' which suggest rents are rising in double digits is that rents have gone up year on year, but this doesn't take into account the fall in rents back in 2008. During September 2008, rents were expected to rise around 10% across the UK, however, accidental landlords who couldn't sell their property, flooded the market with rental properties and promptly crashed rents across the UK from 5-20%, with rents falling even in the tight demand versus supply market of the UK's capital, London.
Summary of Rental Indices
There are various rental indices which typically cover England & Wales, and I have also featured some of the more localised versions for Scotland and Northern Ireland.
Rental averages for October vary from around £680 per month (Belvoir Index) to around £720 (LSL Index) up to £763 (HomeLet Index). The reasons for the differentials are typically due to the percentage of London offices, needless to say Belvoir is a good index to follow outside of London and includes Scotland, while LSL and HomeLet tend to take into account a higher number of rents from London, hence the differential.
Since the start of January 2011, Belvoir's index shows rents haven't really changed at all this year and this is backed up by feedback from the majority of their offices. Some areas have secured temporary increases year on year, but this increase is typically rents recovering to their heights of 2008 rather than real rises in rents to tenants.
LSL shows the biggest gain in rents from the start of the year, suggesting average rents have risen from £682 to £720 per month, a rise of 6%. Homelet suggest a more conservative increase, mainly due to their index starting from £748 in April 2011 to £763 in October, showing a 2% rise.
All three indices suggest rents are taking a bit of a tumble towards Christmas, which is not unusual. Belvoir's Index shows rents are pretty much flat and have been over the last few months. LSL shows a slight increase from £718 to £720, but this is the lowest increase so far and HomeLet shows quite a large fall in rents from £788 to £763 which is a 3% decrease, in just one month.
READ MORE - What to do if you are a Tenant and What to do if you are a Landlord
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