Some disagreement between the big rental market players over just how high UK rents are now.
According to LSL Property Services rents in England and Wales hit a new high of £741 in September, but according to Move With Us rents ended (September) Q3 at £970. A big difference, especially given that both measure asking rents.
The overall difference is easily explained by the fact that the Move With Us index includes Scotland and Wales, whereas LSL measures only England and Wales. The higher average is likely explained by its inclusion of Edinburgh and Aberdeen, where the rental market is really outperforming. It would be expected that this would be balanced out by areas not performing so well, but Scotland is smaller than England and so there are fewer of those to pull the average back down.
However, the indices are also vastly different on a region by region basis, which is obviously not so easily explained.
London is the top dog in the rental market in terms of average rents in both indices, but the difference between the two is staggering. LSL has rents in London averaging £1,092 ending September, but Move With Us has London rents averaging £2,270. LSL says that rents in the south east are topping the UK regions at £1,110 per month ending Q3 at September's end, but LSL says rents in the region ended the month at just £776.
To make matters worse, another major index from Homelet comes in almost smack bang in the middle of the two with a UK-wide average rental rate of £808 per month. All the indices agree on one thing however, rents are still growing. Move With US says rents were 2% higher this year than last, Homelet puts the year on year growth at 2.9% and LSL at 3.2%.
As for which index investors should pay attention to, as most of them already know it is none of them. These national indices are good for one thing, news and a general feel of the market. Rents are far easier than house prices to track in an area, because properties let far quicker than they sell if they are priced right. Investors simply watch the local accommodation listings and use them to gauge what rental rates tenants are willing to pay and whether they are rising or falling etc.
- Monday 22 October 2012