Rents fell in November for the first time in more than six months
Latest figures show average rents dropped to £741 a month, still 3.4 per cent higher than November 2011
The report from LSL Property Services shows that six regions experienced rent drops in November compared to October. The largest fall was in the South East where rents fell 1.9 per cent. In the North West and West Midlands rents went down 1.1 per cent and 1 per cent respectively.
Rents rose the fastest in Wales and Yorkshire and the Humber, while London saw a marginal monthly rental inflation of 0.2%.
On an annual basis, rents are higher than a year ago everywhere except Wales. Rental growth was the highest in London, 6.9 per cent higher than in November 2011 and hit a new peak of £1,104.
“In November, tenants gained a welcome respite as rents paused their climb upwards for the first time in eight months," said David Newnes, director of LSL Property Services. "Landlords look to avoid having properties empty over the Christmas period, and are often more flexible on pricing at this point in the year. But the rental market has not ground to a halt by any means. The housing market is still haunted by the demons of undersupply of new homes and tight credit conditions for buyers with the smallest deposits, which is pushing up tenant demand. This is cushioning the downwards pressure on rents normally seen in the final months of the year, and will see rent rises return as competition intensifies in spring.”
LSL's figures also show that the total amount of rent late or unpaid fell to the lowest level since June 2010, with total arrears of £241m, down from £265m in October.
David Whittaker, managing director of Mortgages for Business, said: “Buy to let investors shouldn’t be put off by the slight fall in monthly rents, which is to be expected at this time of year. The sharp drop in tenant arrears is much more encouraging. It indicates the labour market is in good health despite the prevailing problems in the wider economy, which is great news for landlords because it makes arrears less of concern and reduces the risk of their investment.
"First-time buyer’s pain in landlord’s gain. Mortgage finance for first-time buyers is almost as scarce as water in the desert, which has reduced competition on low-end property and pushed down prices. It’s created a virtuous circle for landlords, who can snap up cheap property and then let it out for big returns, and all the while it is harder for first-time buyers to save for a deposit because renting is so costly.”
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