Rents remain steady as increase in first time buyers

An increase in first time buyers leaving the rental market saw rents remain steady in June.

The average rent in England and Wales remained the same as in May, at £737 per month. This comes after monthly rental inflation has been slowing for a number of months and compares to an average 0.8% monthly increase in June over the five years since 2008.

The continued slowdown leaves rents only 2.6% higher than in the same month last year - below the rate of CPI inflation (2.9%).

David Brown, commercial director of LSL Property Services, said: “The proportion of households in the private rented sector is still growing strongly a trend that’s set to continue for the foreseeable future.

“Yet with better access to finance in the first half of this year the immediate picture has become far brighter for tens of thousands of first-time buyers.

“And now these green shoots are starting to bear fruit for those still renting too as milder competition for tenancies has kept a lid on the cost of renting.”

The number of new tenants in June also indicated a slightly cooler rental market. Across England and Wales there were 0.8% fewer new tenancies in June than in May.

However activity has still seen strong annual growth. The number of new lettings in June increased by 3.5% compared to the same month in 2012.

Regional variation remains. Five out of 10 regions saw rents rise in June. The sharpest monthly increase was in the East Midlands where rents have risen 0.7% since May.

Second fastest were the North West and South West with average rents in both regions seeing a 0.5% monthly rise.

The quickest monthly falls were in Wales where average rents are down 1.9%. Rents in Yorkshire and the Humber fell by 0.6% since May while the West Midlands saw average rents drop by 0.5%.

Meanwhile, rents in the South East have fallen by 0.4% between May and June, representing a sharp decline from only the previous month.

By comparison, between April and May the average monthly rent in the South East had grown by 0.2%.

On an annual basis rents in seven out of 10 regions remained higher than in June 2012. London remained the region with the fastest annual rent rises up 6.4% from a year ago.

But June’s figure is much slower than the recent peak of 7.9% rental inflation registered in the capital in March.