The Guardian reported this Friday June 17th, that May 2011 marked the highest average rent in England and Wales on record with the average rental figures spiking to £695. This latest figure is a 0.5% rise on April.
As Northfields reported a while ago in an article on rental gazumping, rising rents and increased demand are causing tenants to feel the scourge of “gazumping", a phenomena previously the province of the buyer alone.
With the revelation of last months rental figures, the annual rise in rent is now up to 4.4% across the nation– below the rate of inflation in the UK. As can be expected, rents rose the fastest in London, increasing by 7.8% during the last 12 months.
What does the rent increase mean for tenants?
With rents being so much higher, it is obvious the cost of living will be much higher, so careful budgeting is a must for tenants who wish to ensure that they never go into rental arrears. It is best to be realistic about what you can afford as a tenant and to look in areas that will suit your budget. Before your start viewing properties to let make sure you set a maximum rent.
Another way to help you to keep control of your finances is to search for properties to rent where all or part of your bills will be included in the rent.
Of course, with increased competition from other tenants, it is necessary to ensure that your offer is strong and your application is desirable to prospective landlords. Even taking simple steps like making sure you have all your documentation ready and your deposit collected before you offer, can make all the difference. Read this article from Northfields for some other tips to help you to secure the property you want to rent before someone else snaps it up .
What does this rent increase mean for landlords?
Once again, landlords who own property in the capital are experiencing the best returns with the total annual return for London property far outstripping the national average. London landlords experienced a return of up to 9.5% or £22,339 per property. Compare this to the national average of 2.9%, based on average rent of £4,891-£7,414 against a decline in property values of £2,523.
According to a recent buy-to-let index, as reported by the Guardian, if property values “continue on their current trend” the average buy-to-let investor could expect to make a total annual return of 5.7% over the next year – equivalent to £9,404 per property.
With so many would-be first time buyers unable to save up for the required deposits due to rising living costs, many more people are competing for a limited number of rental properties. With such an imbalance in supply and demand, rental gazumping is becoming a common occurrence. As tenants offering increasing higher amounts in order to secure their ideal property, more upward pressure is put onto rental prices.
Landlords Be Aware
This may all seem absolutely good news for landlords but with tenants straining their income to such an extent just to pay the increasing costs of basics such as rent, utilities and food, landlords have to be careful to reference tenants carefully. Landlords should be searching for tenants with secure jobs and whose finances are not stretched to the maximum. Landlords should also notice and react quickly to any delay in payment to prevent rental arrears from spiralling out of control.
If you are new to buy to let investment or don’t have the time to spend thoroughly referencing prospective tenants, it is best to employ a professional letting agent who can not only screen tenants to weed out any problem tenants, but can also often attract the most desirable, professional tenants who often prefer to use agents when searching for property. Call Northfields today, to find out more about how we reference tenants for our landlords to ensure that you have the most reliable tenants in your property on 0208 567 6660 or e-mail at firstname.lastname@example.org Or request your no obligation property valuation online here.