The continuing rent rises seen across much of the country are outpacing rises in interest rates, it’s been claimed.
Property website Home, which issues an authoritative monthly market assessment for the rental and sales sectors, says in its release out today: “Rents continue their upward spiral, considerably outpacing monetary inflation by a large margin. Hence, yields are improving rapidly across the country, thereby incentivising Buy to Let purchases. Moreover, rental yield growth is certainly outpacing the tardy and tiny interest rate rises by the Bank of England.
“Furthermore, the unprecedented large and widening spread between mortgage interest rates and inflation continues to incentivise leveraged property purchases.”
Home says the mix-adjusted average rent rise across the UK over the past year is an eye-watering 19.1 per cent, driven partly by plummeting supply - the number of newly available rental properties is down 23 per cent now compared to June 2021, triggered by a spectacular rise in London rents following the pandemic fall-off.
The website suggests that supply of rental properties has become particularly diminished in the capital.
The number of newly available rental properties being marketed online during the last 30 days is 46 per cent down on a year ago, prompting huge rent rises.
“Hackney, Merton and Lambeth boroughs show the greatest rises in asking rents over the last 12 months, with all three indicating an increase of 42 per cent, which is several times the rate of monetary inflation by any chosen measure” notes Home.
The website also suggests that the sales market may be benefitting from the strength of the private rental sector, with demand from investors remaining high or possibly even rising as investors pile in to a sector in a bid to combat rising inflation eroding their gains.