A new report from Your Move and Reeds Rains has found that in the past 5 years the average of rent has risen by 16.3%.
In absolute term, the average residential rent in England and Wales has grown by £107 since January 2010, to reach £763 as of January 2015.
This is an annual rent rise of 3.0% over the last half decade. However this represents a real term increase of 0.6% per annum when adjusted for inflation over the same period.
Recently, rent has fallen on a monthly basis down by 0.6% between December 2014 and January 2015. Rent is actually higher on a annual basis up by 2.8% higher than what was seen in January.
Adrian Gill, Director of Estate agents Reeds Rain and Your Move, comments: “the nature and affordability of UK housing is transforming before our eyes. In the last 5 years the private rented sector has successfully absorbed an unprecedented influx of tenants, while rental prices have broadly tracked inflation. As ever, the devil is in the detail but as this growth accelerates, even more investments will be necessary for the industry to keep up. So we need more buy to let landlords to help solve the crisis in demand for homes to rent.
It’s also important to recognise that these figures don’t float in a hermetically sealed chamber. There are many other aspects of this sector that feed it like finance and the housing market. Rent represents a landlord’s attempt to recoup investments at a reasonable market rate dictated by consumer prices, inflation and basic principles of supply and demand. Over the long term, rents also tend to reflect higher house prices.
In real terms, rents have risen only incrementally. But any real and sustained growth in rents should offer a clear lesson
As with the purchase market, the only clear way to make rented housing dramatically more affordable is to build more homes, far quicker than in our current case. And until this occurs, landlords are more likely to earn double digit returns on their investments