It is a good time to be a a landlord. The cost of agreeing a new tenancy rose 3.7 per cent over the past year, according to Countrywwide Residential Lettings, with rental growth continuing to be driven by London and the East of England.
In the capital, the cost of a newly agreed tenancy rose 7.4 per cent to stand at an average of £1,229pcm in October 2014 on the back of a cooling sales market. For existing tenants, it is a strong indicator of potential increases in rent. For new tenants, it represents the cost of accessing the private rented sector.
However, notes Countrywide, it does not automatically follow that a rise in newly agreed rents is immediately passed on to all tenants. The average tenant in the UK saw their rent rise 1.7 per cent over the past 12 months, below the 3.7 per cnet seen by a tenant agreeing a new contract. Tenants signing 12, 18 or 24 month deals during which the rent is fixed and landlords choosing not to pass on increases to sitting tenants underpin the difference between the two rates of rental growth.
While rental rates are rising, demand means that the time it takes to find a tenant is falling. Indeed, the average rental property remains empty for 14 days a year, one day less than in the first half of 2014. This represents an occupancy rate of 97 per cent, with half of all available properties let within two weeks.
Nick Dunning, Group Commercial Director of Countrywide plc, advises landlords to make the most of void periods: “While the level of demand means that the time taken to find a tenant is at a near record low, landlords should still factor in a short period when their property will be empty. While voids are often associated with the time taken to find a tenant, in stronger markets property can be re let in advance of it becoming empty. Even in these strong markets, time to carry out repairs and facilitate a handover between tenants is a cost which needs to be factored in.”