An upbeat market snapshot for the lettings sector claims that one region of the UK has seen rent increases in excess of 20 per cent a year.
The Home website’s latest index shows year-on-year average rent growth reaching 20.5 per cent in the West Midlands. The south west of England rents are up 17.8 per cent on average.
“Such phenomenal rises are due to an acute shortage of stock to let. We do not expect supply to rise to meet demand in the immediate future, and therefore rents will continue to inflate” says the website.
“This will also help to push up sale prices in the English regions, Scotland and Wales as yields improve for prospective investors” it continues.
However, Home warns that rental values continue to crash in the Greater London lettings market due to oversupply; rents are down 18.6 per cent year-on-year although several more central boroughs registered reductions in the average rent of 30 per cent.
“By contrast, unprecedented scarcity is evident in all other English regions, Scotland and Wales, thereby driving up rents” says the website, which has recorded some regions – notably the East Midlands – seeing a collapse of over 50 per cent in the total of newly available rental properties entering the market compared to a year ago.
Doug Shephard, director at Home, says: “Investors understand that ‘money printing’ will not only continue for the foreseeable future but will increase to fill the tax shortfall caused by the pandemic and provide further cheap credit. What is also clear is that government policy is resigned to propping up the UK property market at all costs.
“Holding on to bricks and mortar assets is a no-brainer while rental returns are soaring and other asset classes are looking comparatively risky.
“Meanwhile, London is seemingly a world apart. Cut off from international visitors and haemorrhaging residents to less urban climes, rents are in freefall. Correspondingly, as yields collapse, this places downward pressure on prices. Hence, only when rents stabilise will the capital’s sales market be on the road to recovery.”
This post has originally been featured in Letting Agent Today.