Summary
Q Are increasing rents bad news? It depends who you ask.
AThe rising cost of renting a home has been dominating headlines for the best part of a year. Part of this has to do with the speed bumps of deposits and mortgages which are disrupting the flow of traffic on the road to home ownership. The result is that fewer first-time buyers are arriving at their intended destination, while everyone further up the property ladder gets into a tail spin because they can't move forward into their next home. This all comes down to the fact that more people, who would normally be buying, are now renting -- a situation which in turn keeps them renting for longer as they find it hard to save a deposit and pay rent at the same time. If all this sounds a bit like a circular argument, that's because it is. Rents are going up because more people need to rent and there are only so many rental homes on the market at any one time. The latest FindaProperty.com Rental Index shows rents increased two per cent in the past three months to reach an average price of Pounds 876 per property -- the highest average price on record and 4.4 per cent up on where rents were last June. It is most expensive to rent in London where rents average Pounds 1,979 a month, while it is cheapest to rent in the north east, where the average rent is Pounds 582 a month. The West Midlands was the only region to show a dip in rental prices, down 0.3 per cent compared to three months ago. The East Midlands showed the largest average rent rises, with the price of an average rental property increasing by 3.5 per cent over the past three months. Rising rents make it a struggle for would-be first-time buyers to save that all important deposit, but they can be good news for some people. For example, one of the side effects of this pressure on the lettings market is that landlords can now benefit from some of the healthiest returns in years. Gross rental yields on a buy-to-let property now average 4.75 per cent. For those with an interest in personal finance, that's head and shoulders above the average 0.89 per cent offered by cash savings accounts and the average 2.54 per cent return on cash ISAs. Equities have done even less well in the past quarter, with the FTSE falling 1.07 per cent in Q2 2011. Buy-to-let landlords have clearly noticed the opportunity. There's been a sharp rise of 9.7 per cent in the number of homes being offered for rent as landlords look to capitalise on the record returns. And that's good news for everyone - - landlords benefit for obvious reasons, but those searching for their new rented home are also in line for gain -- more choice and stock on the market will ultimately ease the pressure and keep renting affordable. Road bumps or not, that's good news for the rental market.See the full content of this document
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Rise in Rents Could Be Good for Market
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