STRICTLY UNDER EMBARGO UNTIL 00:01 FRIDAY 20TH FEBRUARY 2015 January 2015

Rents 16% higher than in 2010 Over last five years, rents have grown by an average 3.0% per year – but just 0.6% annually after inflation

In last twelve months, rents across England & Wales increase by 2.8%, to stand at £763 in January 2015

Official measure of rents paid across Great Britain now revised more closely in line with this data

Tenant finances see healthy half-decade – 6.8% of rent now in arrears, down from 11.1% in January 2010

Landlords see total returns of 11.7% over last 12 months, down from 11.8% as property price rises cool

Rents are now 16.3% higher than five years ago, having most recently risen by 2.8% over the last twelve months,

according to the latest Buy-to-Let Index from Your Move and Reeds Rains.

In absolute terms, the average residential rent across England &

Wales has grown by £107 since January 2010, to reach £763 as

of January 2015.

This amounts to an average annual rent rise of 3.0% over the last

half decade. However, this represents a real terms increase of

0.6% per annum when adjusted for inflation over the same period.

Most recently, rents have fallen on a monthly basis, down 0.6%

between December 2014 and January 2015. On an annual basis,

rents are 2.8% higher than was seen last January.

Adrian Gill, director of estate agents Reeds Rains and Your Move, comments: “The nature and affordability of UK housing is transforming before our eyes. In the last five years the

private rented sector has successfully absorbed an unprecedented influx of tenants, while rental prices have broadly

tracked inflation.

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“As ever, the devil is in the detail – but as this growth accelerates, even more investment will be necessary for the

industry to keep up. So we need more buy-to-let landlords to help solve the crisis in demand for homes to rent.

“It’s also important to recognise that these

figures don’t float in a hermetically sealed

chamber. Many other aspects of finance and

the housing market feed into this sector.

Rents represent a landlord’s attempt to

recoup investment at a reasonable market

rate – dictated by consumer prices, inflation,

and basic principles of supply and demand.

Over the long-term, rents also tend to reflect

higher house prices.

“In real terms, rents have risen only

incrementally. But any real and sustained

growth in rents should offer a clear lesson.

“As with the purchase market, the only clear way to make rented housing dramatically more affordable is to build far

more homes, far more quickly than is currently the case. And until this happens, landlords are likely to continue to earn

double digit returns on their investments.”

Note: Revision of official rents data by the Office for National Statistics

This index, covering England & Wales and

produced by Your Move & Reeds Rains

parent company LSL since 2010, is now

much more closely matched by official

measures covering Great Britain as a whole,

following a considerable revision by the Office

for National Statistics.

Annual rent rises have averaged 2.4% since

January 2012 according to Your Move &

Reeds Rains analysis. The revised ONS

measure has averaged 2.1% over the same

period, considerably closer than the previous

version of this experimental series, which

averaged 1.2% over the last two years.

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£517

£560£1,175

£771

£781

£652

£556

£583

£571

£546

Monthly rents in January: By region

Immediate variations in market rents, as tracked by this index, are expected to lead more gradual change in the average

rent paid by tenants, as measured by the ONS experimental index. Such variation is aside from the different geography.

Rents by region

Eight out of ten regions saw lower rents in January 2015 than in December

2014. Only the East of England and the North East defied this downward trend,

with 1.3% and 0.7% monthly increases in market rents, respectively.

The dominant movement towards lower rents in January was led by a 2.0%

month-on-month drop in the South West, closely followed by the North West

with a 1.7% drop, and the East Midlands with rents 1.6% lower a month ago.

Despite this round of month-on-month decreases, rents in almost every region

are higher in January 2015 than they were in January 2014. On an annual

basis, rents are now up by 8.8% in the East of England, the largest year-on-

year increase of any region, followed by London (4.8%) and the East Midlands

(3.8%). The only two regions to see rents lower than a year ago are the North

East and the South West, with 0.8% and 1.4% annual falls.

Yields and Returns

The gross rental yield on a typical rental property in England and Wales now stands at 5.0% as of January 2015, a 0.1

percentage point drop since December and a 0.2 percentage point drop from a year before – yields in January 2014

stood at 5.2%.

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Taking into account price growth and void periods between tenants (but before costs such as mortgage repayments or

maintenance) total annual returns on an average rental property now stand at 11.7% over the twelve months to January.

This compares to 11.8% over the twelve months ending December 2014.

In absolute terms this means the average landlord in England and Wales has seen a return, before deductions such as

mortgage payments and maintenance, of £20,072 over the last twelve months. Within this figure rental income makes up

£8,021 while the average capital gain amounts to £12,051.

Adrian Gill continues: “In the wider property market, house price growth has moderated slightly, and we’re seeing a

complementary cooling in landlords’ total annual returns. But fundamental rental yields have remained stable, rippling

very gently above the 5% mark. Moreover, most landlords are shrewd long term property investors who will choose their

time to sell to maximise their capital gain.

“More investment is still needed in the private rented sector. Not only do rental properties provide an essential service,

giving people who can’t yet afford to buy the mobility to seek out work – they are among the most stable investments

available. More landlords on the market can only be better for tenants, allowing prospective renters more choice.”

Tenant Finances

As of January 2015, 6.8% of all rent was in arrears – the lowest proportion of rent in arrears since November 2013. This

represents rapid improvement on a monthly and annual basis.

In December this figure stood at 8.9%, while 7.4% of

all rent was in arrears in January 2014.

This also marks a significant improvement over the

longer-term, since 2010 when 11.1% of all rent was in

arrears. Moreover, the largest arrears spike on record

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was seen just one month later, when in February 2010 tenant arrears stood at 14.6% of all rent due – or almost twice the

current rate of rent arrears.

Adrian Gill concludes: “Tenants have leapt back into the black after December’s seasonal spike in arrears.

“In part this is a recovery from the usual festive squeeze – but also the latest chapter in a far more significant trend.

Seasonal blips aside, we’ve seen a clear reduction in tenants behind on their rent in the past half-decade. This is a sign

that tenants are more in control of their finances than ever before.

“Just as years of joblessness dealt a devastating blow to tenant finances, the current rate at which people are being

pipelined into employment is a tonic for levels of rent in arrears. In the future we will look back at these economic

conditions and recognise that buy-to-let investors have ‘never had it so good’. It’s good news for tenants, it’s good news

for landlords, and it’s good news for the economy.”

- ENDS -

REGIONAL BREAKDOWN

 Rents January

1 month change

Annual Change

Yields January 2015

Yields January 2014

London £1,175 -0.2% 4.8% 4.2% 4.6%East of England £781 1.3% 8.8% 4.3% 4.4%South West £652 -0.4% -1.4% 3.7% 3.9%Yorkshire & The Humber £546 -0.2% 3.3% 6.4% 6.5%North West £583 -1.7% 0.0% 7.0% 7.1%Wales £560 -1.0% 1.7% 4.3% 4.3%South East £771 -2.0% 0.5% 4.3% 4.8%North East £517 0.7% -0.8% 5.0% 5.2%West Midlands £556 -0.7% 0.3% 5.4% 5.7%East Midlands £571 -1.6% 3.8% 5.8% 5.9%England & Wales £763 -0.6% 2.8% 5.0% 5.2%

For further information please contact:

Adam Kirby, The Wriglesworth Consultancy 0207 427 1440

Melanie Cowell, LSL Property Services 01904 698 860

METHODOLOGY:

The index is based on analysis of approximately 20,000 properties across England and Wales. Rental values refer to the

actual values achieved for each property when let. Yield figures are unadjusted, and do not take account of void periods

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or arrears. Annual returns are based on annual rental property price inflation and void-adjusted yield at the point of

purchase. These figures are subject to revision as more data becomes available.

This Buy-to-Let Index has been prepared by The Wriglesworth Consultancy for Your Move and Reeds Rains, part of LSL

Property Services.  It has been compiled using information extracted from LSL’s management information.  The

copyright and all other intellectual property rights in the Buy-to-Let Index belong to LSL.  Reproduction in whole or part is

not permitted unless an acknowledgement to LSL as the source is included.  No modification is permitted without LSL’s

prior written consent.

Whilst care is taken in the compilation of the Buy-to-Let Index, no representation or assurances are made as to its

accuracy or completeness. Your Move, Reeds Rains and LSL reserve the right to vary the methodology and to edit or

discontinue the Buy-to-Let Index in whole or in part at any time.

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