14:34 PM, 26th November 2010, About 13 years ago
Buy to let rentals have gone up for the ninth month in a row to hit a new record high just shy of £700 per month.
According to LSL Property Services, the largest letting agents in England and Wales, the average cost of renting a home rose by 0.4% from £689 to £691 in October, up 4.5% from October 2009.
High demand for rented accommodation is driving up demand as people wanting to buy were either forced to delay because they cannot raise a mortgage, cannot afford a deposit or are waiting for prices to fall.
The rental market is about to reach saturation as the landlords cannot raise finance to expand their portfolios either – which means prospective tenants will not be able to find homes as existing tenants are tending to stay put for longer.
David Newnes, estate agency managing director of LSL Property Services, said: “Rents have been creeping upwards, month in, month out for the last year, and now stand just a few pounds shy of £700 per month.
“The recent increases are likely to steady slightly in the run up to Christmas – traditionally a slower time for the market. But a strong underlying growth will remain, as the key market dynamics are geared towards further rises.”
Rent rises were strongest in the South East, where rentals increased by 1.2% during the month, followed by the North East at 1%.
Only Yorkshire and the Humber saw falling rents – down by 1.4%.
Buy to let landlords can expect an annual return on investment of 8.1%, or an average of £13,799, when rental income and any house price gains are included.
The figure has fallen from the recent high of 13.4% in May due to a slowdown in house price rises.