The latest buy-to-rent index of LSL Property Services show that rents rose for the first time in February in 2011.
Rents in February 2011 in England and Wales were higher by 3.9% over the same period last year, while it rose by a modest 0.2% over the previous month to £684 per month during the same period.
However, the London property market is gathering steam as rents have jumped by 7.7% in the last twelve months, nearly twice the national average although the rise was recorded at a modest 0.3% compared to January 2011.
The highest rise in rents on a month-on-month basis was witnessed in Wales, North West and East Midlands, where they rose by 1.9%, 1.1% and 0.8% respectively.
The biggest monthly falls were recorded in the North East, Yorkshire, Humber and the South West, where they fell by 1.4%, 1.2% and 1% respectively.
“The consistently constrained level of lending to home buyers has bolstered demand and rents in the private rental sector during what is typically a slower period”, said David Brown, commercial director of LSL Property Services.
“Around 158,000 fewer first-time buyers were unable to enter the market in the last 12 months, compared with three years ago. With the mortgage market even more sluggish since the start of 2011, this backlog of frustrated buyers has increased even further and rents have risen correspondingly”, he added.
The total annual return on property stood at 3.9% on an average, as the rise in rentals were somewhat subdued by the marginal fall in property prices.
“Over the past year, extremely strong rental income has underpinned landlords’ annual returns. With house prices unlikely to rocket up as the year progresses, rents will continue to provide the lion’s share of returns for property investors”, said Brown.