However, property expert Kate Faulkner, who analyses the regional data for Belvoir Lettings, says that the recent addition of 13 Belvoir offices to the index will in reality have driven the rise.
Kate Faulkner, property expert for Belvoir Lettings, said:
“Rather than measure average rents on a year-by-year basis, it’s much more useful to track current rents from the highs and lows of the market.”
“Belvoir’s figures show that since the September 2008 height of £709, rents slipped to a low of £674 in July 2009 (-5%), and rose to £697 in 2010. The average rent for 2012 is around £683 per month. This suggests that rents are still down by around 3.5% versus the heights from four and a half years ago.”
Tenant perspective
Analysis of Belvoir’s rental index shows that from a tenant’s perspective this is a good time to rent. “Stock remains tight and when this happens, rents are likely to go up or decent properties are tougher if not impossible to find,” explains Kate. “For those new to the rental market, the sooner they secure a property and a good rental record, the more likely they are to be able to stay in the property without having to pay higher rents for the next six to twelve months. If a tenant does have to move, they will have a good track record of paying rent regularly so it’s easier for them to secure another property.”
Landlord perspective
“From a landlord perspective, it is important to track rents over time, especially if they are letting property to create extra income for retirement,” Kate continues. “Our analysis shows that on average, although in the long term rents tend to keep up with inflation, since the credit crunch they haven’t been able to do so and rents, on average, are 3.5% below what they were in 2008, despite inflation running at over 3% per year. To ensure income isn’t eroded, landlords need to find ways to increase their rents in line with inflation. To help, landlords can visit their local Belvoir office to find out how to maximise rental income now and into the future.”
Rental stability
A rental review of the 137 offices that Belvoir is now monitoring shows that rents are stable and only a handful of offices are seeing any rent rises or falls. This is backed up by anecdotal reports from Belvoir offices who say tenants are struggling with little or no wage rises and are therefore making more of an effort to negotiate rental deals.
Although there is little evidence of change in rents this year on a month-by-month basis, any national average figures really hide what’s happening at a regional level. Rents have grown in areas such as London, the North East, South East and South West over the last five years, but rents in areas such as East Anglia and Yorkshire haven’t recovered to the heights of 2008.
Regionally, five out of the 11 regions Belvoir track have recovered to rents above the heights of 2008. London looks like rents have gone up dramatically and indeed rents are higher on a like for like basis, but not as much as the 35% suggests.
Scotland looks like it’s not performing at all well, but this is a statistical anomaly, which will be redressed in May’s data and is due to more offices coming on board. Like for like rents are pretty static.
Belvoir rental analysis – region by region
- Scotland: rents for individual offices remain static for 2012.
- East Anglia: in most areas rents appear to be static, although so far this year Ipswich is performing well, whereas Huntingdon is showing signs of small rent falls.
- North West: as with other regions, most areas are static. Areas with rents rising include Chester, while areas such as Prescot and Manchester are showing signs of small rental falls.
- East Midlands: overall shows signs of rents slightly softening. Areas such as Boston, Kettering and Sleaford show slight falls, whereas areas such as West Bridgford and Loughborough are showing rents rising.
- Yorkshire: average rents have stabilised across nearly every office, bar some small falls in Leeds.
- South East: rents overtook the heights of 2008 in the last month and most offices are seeing static to slowly rising rents. Harlow and Hitchin seem to be the exception with small rental falls, which are in line with anecdotal discussions with various offices.
- West Midlands: rents are currently softening on average in areas such as the Jewellery Quarter and Stafford. Shrewsbury is currently bucking the trend and rents are rising, albeit ‘nudging’ upwards.
- South West: average rents continue to rise in 2012, with Gloucester and Highcliffe being the only offices showing signs of softening rents.
- London: office rents are also showing some signs of softening despite all the media noise last year. On average rents have gone up regionally on the Index due to the addition of Belvoir Docklands.
- North East: rents have done very well in the North East to date and this is the first sign we’ve seen this year of rents falling slightly. Sunderland seems to be holding its own while Tynedale reports no reduction apart from with top end properties.
