The average cost of renting a UK property increased by five per cent in March, compared to the same month a year earlier. According to HomeLet's latest Rental Index, only three regions in the country saw leasing charges fall on an annual basis - the north-east, Wales and the north-west. Wales experienced the greatest drop, with rents plummeting by 4.6 per cent. The biggest jump was posted in London - at 6.1 per cent - although the south-east was not far behind with rental costs climbing by 5.1 per cent in the area.
However, in terms of monthly increases it was Scotland that came out on top, with rents here increasing by 6.4 per cent between February and March to stand at GBP 558 per month. This is still well below the UK average cost of GBP 764. Although high rents may be appealing to investors - and naturally attract them to markets in London and the south-east - those looking for real estate investment opportunities may do best by turning to the north of the country. Data published by Paragon revealed average yields for residential property in the north-west stood at 6.6 per cent in the first quarter of this year, while in the north-east they were 6.5 per cent. By contrast, yields reached 5.9 per cent in central London and 5.7 per cent in the city's outer districts.
Ian Fraser, managing director of HomeLet, believes there is the possibility of further rent increases throughout 2012. "Traditionally rents rise in the run up to September, when more high-yield student properties go on to the market. But with added demand for short-term leases in the capital during the Olympics, average rental values could reach record highs," he stated. Last month, partner for residential lettings at Cluttons Lynn Hilton revealed it is "unclear" how much property owners will benefit from high-value, short-term leases during the Olympic Games. She explained many landlords are "looking at the bigger picture" and are keen to retain good tenants to prevent void periods, rather than capitalising on demand for this summer's sporting event.
- Monday 23 April 2012