UK property rents starting to fall with only London seeing a tiny increase in December, report shows

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UK property rents fell by 1.3% in December following six months of rises and are now at £820 a month, some 3% lower than a year ago, according to a new report.

Supply has increased, with 1.7% more properties available to rent in December, some 4% higher than a year ago and following six months of declining stock levels, says the latest rental index from findaproperty.com.

 

It also shows that properties now let within 56 days, a day longer than November’s 55 days. This is still considerably shorter than the peak of seven days in January. Tenants are holding out until the New Year before signing new leases.

Values of rental property in London continue to rise, up 0.7% to £1,651 per month in December, while the majority of other regions have seen falls in asking rents. Yorkshire and the Humber suffered the biggest decline in rental values in December, down 8.8 %, the report also shows.

‘Our figures reveal a straightforward economic reality. There are more properties on the market and therefore renters have more choice so landlords are competing for their business. This rental price competition is made more severe by the recession as tenants, fearing or experiencing unemployment, become more concerned than normal about how much properties cost to rent,’ explained spokesman Nigel Lewis.

‘But looking forward, there are a number of factors that point towards a bounce back after the New Year despite December’s drops, the most prevalent of which is increased demand from students, immigrants and first time buyers, who continue to be priced out of the sales market or are unable to acquire sufficient mortgage finance,’ he added.

A report from LSL Property Services is also expecting 2010 to be a year of recovery for the UK’s private rental market. The lettings agent network is predicting that landlords will see average annual returns of £16,000, just under 10%, next year, as rental income remains steady and house prices rise 5%.

 

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