Rental market continues strong performance

Rental prices have continued their strong performance over the past year as supply continues to drop, according to the latest rental index from FindaProperty.com.

Rental prices were 4.9% higher in March 2011 than in March 2010, with the average monthly rent now £860.

Part of the reason for the rise in rents is the lack of supply. There are fewer rental properties available now than in the last quarter of 2010, and market supply is 35% below its peak in April 2009.

Except for a brief dip over the traditionally quiet Christmas period, rents have risen consistently during the past year. Landlords are now asking £40 more per month than they were in March last year.

FindaProperty.com’s data showed wide variations across the UK. In Scotland rental prices increased by 2.7% over the quarter, the highest rate of any region, yet it fell by 2.7% in the North West during the same period.

In the last quarter rental prices in London have increased by £43 to £1,968 pcm, an increase of 2.2%, and they have increased by 17% since last March. Rental yields in the capital are now at 5.4% – the joint highest in the UK, along with Scotland.

Meanwhile the North West saw the most drastic change in fortune this quarter, experiencing a 2.7% decline in rental prices over the period compared to a 1.0% increase the quarter before.

Samantha Baden, property analyst at FindaProperty.com, said: “In the past couple of years Britain has turned into a nation of renters. The challenges of the property market since 2008 mean that renting has become mainstream and has lost whatever stigma it once had.

“People have simply got used to long periods of renting and estate agents have had to change their business models to focus on lettings while sales were quiet.

“The lack of supply is continuing to exacerbate the problem, driving up rents even further, and it doesn’t look like this situation will change in the short term.”