Rent rise report reveals the story in Yorkshire
More than 15,000 properties have been analysed by a Yorkshire residential letting specialist to gain an inside track on the pace of rent rises.
Linley and Simpson carried out its own research after a recent national report suggested tenants were in danger of being priced out of private rented accommodation in some parts of the country.
“We launched this analysis, the biggest we have ever undertaken, to gain an accurate insight into the performance of the Yorkshire letting market, and demystify what rental increases it has seen,” says director Will Linley.
The independent agency studied a sample of properties with monthly rents of between £350 and £1,000. It showed that the average rent has increased from £593.30 per calendar month in 2011 to £654.54 in 2015, a rise of ten per cent over five years. The growth has been incremental, ranging from a low of 1.5 per cent in 2011 to a high of 2.33 in 2014. Last year, rents rose by 2.20 per cent, which is lower than annual house price growth. The latest Land Registry data for December 2015 shows that residential property prices in Yorkshire rose by 3.8 per cent year-on-year, bringing the average house value to £125,492.
“Against a backdrop of spiralling demand for rental properties, we feel that Yorkshire rents still strike a fair balance and, because of this, renting holds appeal for landlords and tenants alike,” says Mr Linley.
The only area out of kilter with the overall findings was Leeds city centre, which has a supply and demand issue. Thanks to the enormous amount of interest in city living, wedded to a lack of new developments, rents in the heart of Leeds increased at a faster pace than the rest of Yorkshire last year. Linley and Simpson say that city centre rents saw a nine per cent increase last year bringing the average rent to £751. They have risen by 15 per cent over the last two years
“It’s a less mature market than many other sought-after locations across the county and, as a result, it may be more volatile to market forces and extra sensitive to the peaks in demand we are now witnessing,” says Mr Linley. “As work on new developments starts and they begin to open their doors to tenants, we should see a levelling out in the rate of rent rises in the city centre.”
More people are choosing to rent long term rather than buy, while others are forced into the lettings market while they save to get onto the property ladder. According to the Halifax, the average age of the first-time buyer is now 31, up from 28 in 1995.
They are competing with investors who are opting to put their cash into bricks and mortar, especially now that buy-to-let mortgages are back on offer after becoming virtually obsolete in the recession.
Even though the government is hitting landlords with an extra three per cent stamp duty on buy-to-let purchases from April this year and the Treasury is slashing the amount of mortgage interest that can be off-set against tax, many are undeterred. They are keen to put their money into property rather than in the banks, where interest rates are low.
“Investors want to continue to benefit from a return that outperforms other savings rates,” says Will Linley, who insists that most Yorkshire landlords have not sought to take advantage of a national surge in demand for rental properties.
“Instead, they have adopted a common sense approach, which underlines the value they place on having a quality and reliable tenant in situ. It is important to remember that landlords do not see income from the monthly rent as the sole litmus test of their investment. Many take a longer-term view and identify capital growth as the key factor for putting their money into property.”
A recent Your Move Reeds Rains buy-to-let index says average rents in England and Wales rose by 3.4 per cent last year, while a YouGov poll for housing charity Shelter showed that that 53 per cent of tenants find it hard to pay their rent. Shelter wants half of the government’s target of building 250,000 new homes a year to be “affordable”.