The cost of renting a home in England and Wales fell in January, according to a survey from LSL Property Services.
The latest Buy-to-Let Index from the UK’s biggest letting agency network also showed that rent arrears were down month-on-month from December.
Average rents fell 0.3% to £682 but are still 4% higher than they were this time last year. Although the January fall marked the second consecutive monthly decline in the rental market, landlords have reason to be optimistic with signs of renewed growth in certain areas.
Demand for rental properties remains high as a consequence of the flat housing market and the difficulty first-time buyers are having in finding mortgages.
The slight dip in rent prices is in part due to the return of confidence to the buy-to-let sector. The number of buy-to-let loans available increased by 7% in the final quarter of 2010, according to figures from the Council of Mortgage Lenders.
David Newnes, managing director of LSL, said: “The recent loosening in the buy-to-let mortgage market has boosted the supply of rental homes on the market, a crucial factor in the temporary drop in rents.
“In the last quarter of 2010, the number of buy-to-let loans leapt by 7% according to CML. With more products coming onto the market, there are signs that this trend is continuing into 2011, allowing a growing number of professional landlords to get onto the market – or broaden their portfolios – and take advantage of near record rental income and strong tenant demand. International investors, too, have played their part, looking to place their cash in UK bricks and mortar while yields look attractive and properties are affordable.”
Mr Newnes said the figures are distorted by the fact that many landlords lower their rent throughout December and January when demand is traditionally low, a situation that could have been exacerbated by December’s arctic weather conditions.
“Although rents have fallen, the strength of the rental market cushioned the additional impact of winter. Fewer tenants tend to move in December and January – and many landlords drop rents to avoid experiencing vacant properties. Despite the seasonal downturn, and the increase in supply, there remains healthy demand for property and rents are still £26pcm higher than last January,” he said.
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