Average rent £712 per month

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by Gill Montia

Rents rose for a second consecutive month in May, according to the latest buy-to-let index from LSL Property Services.

Average rent in England and Wales increased by 0.4%, to £712 per month, as rents returned to January levels.

However, the rate of annual increase slowed with rents only 2.3% higher than a year ago, compared to 2.4% in April.

In May, rents fell by 1.5% in the East Midlands, 0.7% in Wales and 0.3% in the North East.

They rose fastest in London and the South East, increasing by 4.2% and 3.1% respectively.

May saw London’s average rent at its highest on record, an 0.6% monthly increase taking the figure to £1,038, compared with a previous high of £1,033 in November 2011.

Steadying property prices in May meant total annual return on a rental property rose to 4.8% (up from 3.7% in April) representing an average return of £7,912 (rental income: £7,666, capital gain: £245).

Average yield on a rental property remained steady at 5.2% and arrears improved in May, with 8.9% of all rent late or unpaid at the end of the month, amounting to £275 million, compared with £306 million in April.

LSL Property Services director, David Newnes, comments: “The reality is that thousands of frustrated buyers are still financially trapped between a rock and a hard place.

“Historically high rents and rock-bottom savings rates are hampering attempts to save for the larger deposits banks now require – not to mention meeting the cost of the reinstated stamp duty tax.

“In turn, fewer tenants are able to leave the sector, and the strong tenant competition is pushing up rents as a result, making saving for a deposit harder still.”