February 2015

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Largest annual rent rises since May 2013

Average rents increase 3.1% year-on-year across England and Wales to stand at £766 in February 2015

East of England sees 10.2% annual rent rise - the strongest growth of any region in over five years

Tenant finances worsen, with 7.6% of all rent in arrears in February 2015, compared to 6.9% a year ago

Returns for landlords stabilise as total returns climb to 11.5% over the last twelve months

The average rent across England and Wales is 3.1% higher than February last year, the greatest year-on-year increase

experienced in nearly two years, according to the latest Buy-to-Let Index from Your Move and Reeds Rains.

This annual boost follows a monthly uplift of 0.4% in

February 2015, a £3 increase which comes after a series of

monthly drops in January (-0.6%), December (-0.1%) and

November (-0.2%).

In real terms, average residential rents in England and

Wales now stand at £766, compared to £763 in January

2015 and £743 in February last year.

Adrian Gill, director of estate agents Reeds Rains and Your Move, comments: “The rental sector is carrying the

weight of the housing crisis. More homes are needed to house an ever-growing population. The supply simply isn’t

there. The result is that landlords are catering to those who can’t afford to buy as well as those who choose renting for

the flexibility it offers them – workers moving into new jobs, or people wanting to get a feel for an area before committing

to property ownership and setting down roots.

“House prices rising out of reach for people at the lower end of the market makes increasing demand in the private

rented sector inevitable. A serious and substantial commitment to new builds is the only way to bring supply in line with

demand.”

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Rents by region

Rents in the East of England have rocketed up to £787 in February 2015

compared to £714 a year ago. This represents a 10.2% year-on-year

increase for rents in the region – the largest growth seen in any region in

over five years. It forms the latest link in a chain of accelerating annual rent

rises for the East stretching back to July last year. London saw the second

highest annual rise with rents resting 4.9% above levels in February 2014.

The North West (-0.3%) and North East (-0.4%) were the only regions to see

a year-on-year drop in rents, while prices in the West Midlands and South

West remained stable compared to last year.

On a monthly basis, the South West took the lead with a 1.7% increase in

rental prices, closely followed by Wales (1.2%) and the West Midlands

(0.9%). Although rents in the East of England saw a more modest 0.7%

boost, it is the only region to have experienced monthly rises for ten

consecutive months, contributing to its dominant position in the year-on-year leaderboard.

Rents have cooled in four UK regions. There were month-on-month rent decreases in Yorkshire, the North West, the

West Midlands and the South East of England, with all of these regions seeing a 0.4% dip from January to February.

Adrian Gill explains: “Here we have a perfect example of rents following the jobs market. With growth gathering around

London, renters are moving to areas that allow them to commute into the capital. Rents are rising in line with the salaries

of these new tenants. It’s a clear illustration of why new builds are important to the wider economy. Job creation

depends on workers in England and Wales being able to find accommodation. Landlords are providing a much-needed

link between jobs and people. They have ensured that the UK’s talented workforce has the flexibility to move to the

places their skills can be best put to use.”

Yields and Returns

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

since January and a 0.2 percentage point drop from February 2014 when yields stood at 5.2%.

-SEE GRAPH OVERLEAF-

£521

£566

£1,181

£768

£787

£663

£561

£581

£569

£544

Monthly rents in February: By region

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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 11.5% over the twelve months to

February. This uptick bucks a trend of slowly sinking returns which stretched over the past six months.

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 £19,849 over the last twelve months. Within this figure rental income makes

up £8,167 while the average capital gain amounts to £11,682.

Adrian Gill continues: “With buy-to-let properties offering such generous returns on income and capital, it’s no wonder

first-time buyers are getting squeezed out by landlord demand. Yields have steadied near the 5.0% mark, and we’re

seeing a reciprocal stability in total annual return as property prices stabilise.

“In the current climate, renting is a sound investment, but still more support is required to ensure that this stability

continues. A stable market isn’t just good for landlords – it’s good for tenants. But we need to make certain that that the

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resting point between rents and yields is in the best interests of all parties involved. Building more homes is the only way

to ensure that tenants and landlords alike can prosper from the recovery.”

Tenant Finances

As of February, 7.6% of all rent was in arrears – an increase on both a monthly and annual basis. In January, just 6.8%

of all rent was in arrears, while this figure stood at 6.9% in February 2014.

Adrian Gill concludes: “With arrears, more than any

other indicator, it’s important to keep an eye on the longer

term trends. It’s no good predicting joy or doom every time

the figure fluctuates on a monthly basis – just look at the

longer term trend. This February increase is a very minor

setback in the face of the dominant downward trend in

arrears.

“This type of uptick is a perfectly natural part of the

market’s movement and has occurred many times before.

The long-term message is clear – we’re seeing far less

rent in arrears than five years ago, and this is a very good

thing for the rental market.”

- ENDS –

REGIONAL BREAKDOWN

Rents February 1 month change Annual Change

Yields February 2015

Yields February 2014

London £1,181 0.5% 4.9% 4.3% 4.7%

East of England £787 0.7% 10.2% 4.4% 4.4%

South West £663 1.7% 0.0% 3.7% 3.9%

Yorkshire & The Humber £544 -0.4% 1.7% 6.5% 6.5%

North West £581 -0.4% -0.3% 6.8% 7.1%

Wales £566 1.2% 1.8% 4.3% 4.3%

South East £768 -0.4% 1.6% 4.3% 4.7%

North East £521 0.8% -0.4% 5.2% 5.2%

West Midlands £561 0.9% 0.0% 5.5% 5.7%

East Midlands £569 -0.4% 2.8% 5.7% 5.8%

England & Wales £766 0.4% 3.1% 5.0% 5.2%

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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

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.