Rents down for second month in a row in UK

Rents fell for the second month in a row during January as investors piled into the buy-to-let market, research has indicated .

The average rent in England and Wales dropped by 0.3 per cent to stand at £682 a month, as a rise in professional landlords helped to ease the mismatch between supply and demand which had been pushing up rents, according to lettings agent network LSL Property Services.

But despite the fall, rents were still four per cent higher than they were a year ago, after they hit record highs during the second half of 2010.

The group added that it was usual to see falls during December and January as, with fewer people moving home around the festive season, many landlords reduced the amount they charged during these months to avoid having their properties empty.

David Newnes, estate agency managing director of LSL Property Services, said: “The recent loosening in the buy-to-let mortgage market has boosted the supply of rental homes on the market, a crucial factor in the temporary drop in rents.

“With more products coming onto the market, there are signs that this trend is continuing into 2011, allowing a growing number of professional landlords to get onto the market, or broaden their portfolios, and take advantage of near-record rental income and strong tenant demand.

“International investors, too, have played their part, seeking to place their cash in UK bricks and mortar while yields look attractive and properties are affordable.”

But while some areas of the country saw steep falls in rents during January, the cost of being a tenant continued to rise in other regions.

Average rents rose by 0.9 per cent in the East Midlands, and increased by 0.8 per cent in both the West Midlands and Yorkshire and the Humber, while they edged ahead by 0.2 per cent in London. But at the other end of the scale, the cost of renting a property fell by 2.5 per cent in East England and dropped by 2.1 per cent and one per cent in Wales and the Northwest respectively. There were also drops of 0.4 per cent in the Southwest and South- east. Fewer tenants were late paying their rent in January, although at 11 per cent the level of unpaid rent remained high, despite being down on December’s figure of 11.7 per cent.

Overall, the group estimates that a total of £258 million of rent went unpaid last month.