Not only that, rents are up on average by 3.7 per cent year-to-date, which has been the fastest pace for two years, though with rents, as with property prices, there are always wide regional variations.
For example, rents in the east of England grew by an annual 12 per cent, which even outpaced London increases, while rents in other regions actually fell, in the East Midlands by around 0.2 per cent.
A survey by property estate agents Your Move, and letting agents Reeds Rains is suggesting however that rent inflation will to come in at around 1.7 per cent by next year.
To summarise the survey?s finding:
- House price growth in South East and East Anglia has overtaken London
- For the first time in four and a half years, London will no longer lead the regions. The South East and East Anglia, are experiencing stronger year-on-year price rises than the capital
- Across England and Wales, house price growth is picking up on a monthly basis, and in April, climbed 0.2%
- The annual rate of property price growth has halved since last summer, down to 5.3% in April
- Q1 sales were down 10% before the General Election, but new certainty is now likely to re-balance this.
Adrian Gill, director of Reeds Rains and Your Move estate agents, says:
?House price growth has jolted awake again in April, climbing 0.2% (£600) in the past month, following what was a more lethargic period for property values. This has lifted the average house price across England and Wales to a new high this year, at £275,961. Annual price growth is still cooling, but mainly due to some recent negative monthly price rises. The direction of travel is clear and accelerating ' and most importantly, momentum is picking up where it was lacking before.
?By contrast, annual price rises in London have fallen sharply. As a result, the capital has been knocked off its perch by the South East and East Anglia, who have now edged ahead of London with the strongest year-on-year increase in property values of all regions across the country, at 7.1% and 6.9% respectively. In contrast, annual growth in London has shrunk from 9.0% in February to just 6.8% in March 2015.
?This is the first time for nearly four and a half years that London has not been leading the pack in terms of regional house price growth, as higher stamp duty rates take some of the shine off high-end properties in prime central areas. In the City of Westminster, where the average property is now worth £1,382,965, prices dropped 5.2% during the month of March, as pre-election speculation of a Mansion Tax put a dampener on enthusiasm for the most exclusive London homes. London also saw the sharpest decline in completed home sales between Q1 2015 and the same period a year ago, falling 16.5%.
?Election uncertainty has now vanished, so arguably London?s unique property market could see a fresh boost. But this mansion tax effect is one for the very top of the market. Away from the prime hot spots, affordability is still the biggest factor holding back further price rises ' owning a London home is still more of a dream than even an aspiration for millions.?
The threat of rent controls may have had a calming effect on rents prior to the election, but increasing demand for rented property is not going to go away. Something like one in five of all households are now renting, consequently, unless there is a step increase in new housing starts, this demand is likely to increase.
So, unless there were any more restrictive regulation measures, unlikely under the new government, which would run the risk of putting off potential landlords and putting even more upward pressure on rents, the upward trend will continue.
Over half of all landlords asked in the survey think that now is a good time to invest in buy to let because the capital gains are better than other forms of investment and are more important to them than gaining the greatest yield.
Nearly two-thirds of the landlord respondents said that the most important factor is getting good long-term tenants, followed by a quarter who say having tenants who pay on time. Just 4 per cent of landlords put the greatest yield as their top letting priority.
This defies the myth that landlords are all money grabbing and ready to evict tenants at the drop of a hat. They have in most cases been happy with their returns in terms of capital gains which have nicely built-up the value of their rental portfolios, and have been providing the seed capital to finance further purchases.
As the economy improves, tenant job security has led to greater rental income security. In March 2015 around 7.4 per cent of all rents were in arrears, down from 7.6 per cent a month earlier and 7.8 per cent a year ago. By comparison, in May 2010 rental arrears were closer to 11 per cent and reached a record high of just under 15 per cent in February 2010.
Almost 20 per cent of landlords have increased their portfolio size over the past year, and 25 per cent expect to do so in the coming year. The trend continues and all indications are that despite all the incentives introduced by government to help first-time buyers, demand for rented properties continues to increase.
The Investors' Chronicle article identifies two major themes which support the continued growth of the private rented sector (PRS): (1) is the fact that despite incentives, house building is slow and inadequate to boost supply sufficient to bring down prices and address affordability, and (2) demographic change means that there is a section of the population, mainly young people who are making a conscious lifestyle choice in deciding to rent instead of aspiring to buy.
To underscore this, in the first quarter of 2015 buy-to-let lending grew by 20 per cent year-to-year, far above the 1.6 per cent increase in residential lending. This trend looks like it will continue and could be given a further boost with a wall of money waiting to invest from those releasing pension money and looking for a place to park it.
Prior to the election landlords were fearful that more intervention would change the game completely. Landlords are supportive of measures to weed out the rogue operators, but any suggestion that rent rises should be capped and that compulsory long-term tenancies with tougher rules on evictions certainly would have drastically reduced the attractions of buy-to-let. This would have inevitably led to a shortage of quality rental properties on the market to boot.
Read the full Your Move, Reeds Rains Survey
Article courtesy of LandlordZONE