The Residential Lettings Survey for July, from the Royal Institution of Chartered Surveyors, shows the cost of renting a home in the UK rose by 4.3% over the past 12 months. Prices are expected to rise by 2% over the next six months, and by 3.9% during the next 12 months, and it's estimated that gross yields are now averaging 5.2%.
This modest increase in rents is still being driven by substantial tenant demand, although supplies are generally stable. Surveyors have pointed out that much of the demand is coming from would be buyers that are forced to rent until mortgage accessibility improves. The number of new instructions to let property is finally stabilizing after 18 months of increases, and 2% of surveyors reported new instructions had fallen rather than increased.
There is quite a lot of variation regionally, and the highest growth was achieved by the North-East where the average rent increased by 6.9%. In London and Scotland, rental rates have increased by 5.9% over the past year. During the next six months rents are expected to increase by 3% in Scotland and by 4.1% in London. Looking further ahead, rents in London are expected to grow by 7.8% during the next 12 months, and rents in the East and West Midlands are both forecast to see good growth. However surveyors in Wales have seen little growth in rental rates.
It's hardly surprising to see large regional variations in yields, with Yorkshire and Humberside reporting yields of around 9.6%, while yields in London are just 4.5%.