Buy to let rents rise £1 as first-time buyers move on

Buy to let rents are still increasing despite the market suffering from large numbers of people deserting rental properties to buy their own homes under schemes promoted by the government.
LSL Property Services, which owns letting agent brands Reeds Rains and Your Move, says buy to let rents have increased by an average of just £1 since May.
That figure is lower than the rate of inflation and the average rent is now £738 per month.
LSL compiles a buy-to-let rent index which reveals that rents in July were just 1.8% higher than the same month in 2012 but adds that recent rent rises have been ‘very small’.
Their index also highlights a big rise in the number of new tenancies in England and Wales which rose by 6.6% between June and July.
There was also a big increase in lettings during July, when compared to July 2012, of 12.3%, but that demand for tenancies is declining as increasing numbers of renters opt to become first-time buyers.
Despite this trend, the gross average yields for landlords are at a healthy 5.3% and tenant arrears are also in decline to equate in July to 8.1% of all unpaid rent.
However, the LSL figures aren’t mirrored by Sequence, part of the Connells group, which says that new tenancies have rocketed by 18% on the same period a year ago and this could be a boom time for the lettings industry.
Between June and July, Sequence says that the number of new tenancies agreed rose by 6% and in London alone they rocketed by 13%.
Their figures, which are taken from its 290 branch network which includes brands William H Brown and Allen & Harris, also put the average buy to let rent in the UK at £751 with those in London forking out £1,437.
The firm’s head of lettings, Stephen Nation, says that the number of new rental contracts being signed is running at record levels.
He added: “Levels of activity and growth across the rental market are unprecedented and showing no signs of slowing down.”
Indeed, he said that demand for rental properties is outstripping supply in most areas with the number of potential new tenants rising by 4% in one month – against a rise of 3% of new properties being listed for rent.
This has led to buy to let rents increasing recently by 2% though the firm says that across the UK, rents grew by 6% year-on-year while in London the figure was less than 5%.
Mr Nation also said that Sequence’s figures showed that new applicants over the past 12 months increased by 5% and new properties by 8%.

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