BRITAIN'S RENTS UP

British rents have risen 1.2 per cent over the past three months latest figures show, because the demand for houses is strong. The market for flats remains weak however.

According to The FindaProperty.com Rental Index, August 2009, average monthly rents have risen by GBP10 across Britain since April to GBP829, following three consecutive months of increases. This means the year-on-year decline has eased to minus 4.8 per cent, the lowest decline since January 2009.

Rents for houses rose for the fourth month running in August, but the oversupplied flats sector is “languishing” FindaProperty.com reports. Many developers dumped inner city flats they could not sell onto the rental market over the past 18 months, pushing up supply.

Rents for houses rose 2.5 per cent between April and August to GBP868 per month, while asking rents for flats have sunk minus 2.6 per cent since February to GBP749 per month, the website says.

According to Michael O'Flynn, director of FindaProperty.com, demand for houses was boosted by many families opting to rent, because they could not get a mortgage to buy a home.

In prime central London districts like Mayfair, Belgravia and Kensington, the lettings market continues to struggle. According to estate agency, Knight Frank, average rents are down 19.3 per cent on June 2008 after having fallen for five consecutive quarters.

However, Juliet Hill, Lettings partner at Knight Frank's Knightsbridge office, said the downturn had eased in prime central London during August.

“I wouldn't say there was a recovery, but rents are more stable,” she said,” the volume of stock coming onto the market is down 35 per cent compared to this time last year, and at one or two offices we have had competitive bidding.”

Properties most in demand are family houses in the GBP2000 to GBP3500 per week range, because tenants wanted to be ready for the autumn school term which starts in September, and good quality two bedroom flats priced at GBP800 to GBP1500 per week, she said.

She was uncertain how the market would perform over the next twelve months.

“I remain cautious,” she said, “landlords need to be competitive. If they ask ambitious rents then there will be long void periods. Our market is very dependent on the City (financial services sector). There are some reports saying the City firms are recruiting again, and others say they are not. Until we know which where they are going we can't know how rentals will be.”

According to FindaProperty.com, rental yields are 4.75 per cent nationally. In prime central London they are between 3.5 – 4 per cent Knight Frank reports.

(All The World's a Home : Global Property News)