The UK has seen rental prices rise by 2.3% during April, May and June in comparison with the first 3 months of the year. The Average rental price has increased by £19 per calendar month from £820pcm in March to £839pcm in June.
This shows that average rental values have seen a large increase of almost 2% than at the same period last year.
At the same time, and a largely contributing factor, levels of rental property stock have fallen by over 2.7% in June compared to March's figures.
Overall, Landlords will be pleased to hear that rental yields have increased from 4.53% in March to 4.57% in June.
Rental during April, May and June rose 2.3% from Quarter 1 taking asking rents to their highest level since January 2009 (£840pcm).
Rents sought by landlords are now £16pcm higher than a year ago. Since the start of 2010 rents have climbed 4.4% from £804pcm in January to £839pcm in June.
Despite some monthly pick up, supply of rental properties falls quarter on quarter.
Between the end of Q1 and the end of Q2 2010 the amount of rental property on the market fell 2.7%.
Stock levels are now 28% lower than the peak in May 2009.
However, since the start of Q2 stock levels have risen month on month - up 2.2% in May and 4.7% in June. Despite this, the number of properties available to rent at the end of Q2 is still below that of Q1.
The supply of houses available to rent fell by a huge 6%, showing the lowest stock level since July 2008.
This has pushed rents for houses up by almost 3% to an average of £869pcm across the UK. Since the start of the year house rental stock levels have fallen over 18% leading to consistently increasing rents during the same period.
In January asking rents for houses stood at £829pcm, rising to £846pcm by the end of Q1. Rents for houses now stand at and £869pcm at the end of Q2.
The number of flats to let also fell by almost 1% since March, with apartment stock levels having fallen by 5.5%. The number of flats to rent rose month on month throughout Q2, but remain below the levels seen at the end of Q1.
As a result of falling stock, asking rents for flats now stand at £777pcm, the highest they have been since November 2008. Rents for flats are now 1.3% higher than at the end of Q1 and 3.3% above rental prices at the start of 2010.
Despite a pick up in the number of properties to rent in Leeds during Q2, the actual stock level fell in comparison to last years.
Yorkshire shows an imbalance in demand versus supply, with the highest quarterly rent rise was in the whole of the UK, with a 3.4% increase in rental prices.
Another fall in level of rental stock combined with strengthening rents has pushed the rental market further towards equilibrium between supply and price. With less surplus stock and rents now beginning to rise more sharply, there is more balance between landlords and tenants, and less scope for either party to dictate the terms of a tenancy.
Leeds Landlords can contact us for advice about increasing rental rates for existing Tenants in properties.
Research carried out by a number of leading professionals, including www.arla.co.uk show the amount of available rental properties is worsening, with 70% of Letting Agents reporting they have a surplus in Tenants compared to available properties and rental stock. This is an increase from 59% on the last quarters figures.
The spring period usually sees a rise in rental properties coming onto the market, and although there is some evidence of landlords considering selling up, it is not enough to counteract the change in supply, says Ian Potter of ARLA.
The situation has deteriorated in recent months, with the supply and demand of rental property causing a serious rental housing shortage.
ARLA fears that the Chancellor did little to incentivise investment in the PRS (Private Rented Sector), and in fact, actually discouraged potential Landlords from investing further after increasing the Capital Gains Tax. Combine this with low levels of new properties having been created during the last few years and an upcoming cap on housing benefits, means that instead of the housing market getting back on its feet, it may leave people in the desperate position where they cannot actually afford a home.
A property analyst at www.findaproperty.com, said that the resurgence of the sales market has left tenants short of options and the result has been increasing rental prices.
There is a good equilibrium between stock levels and prices at which the market is perfectly balanced, this means that neither the Tenant nor the Landlord have the dominant position in negotiations at present. As the mortgage market remains unconvincing at best, demand for rental property will stay strong as would-be buyers still struggle to secure mortgages.
There has been some movement in the lending market recently, with new lenders entering the market and more mortgages becoming available, although it is hugely unlikely that the markets will open up completely and allow buyers to secure good value mortgages. The property analyst warns that if things continue at this rate, we could expect asking rents to soar.
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