The income received by landlords is increasing at its fastest-ever rate, according to new research.
The latest Buy-to-Let Index from the Your Move and Reeds Rains estate agent chains has found that annual rent rises hit 5.6% across England and Wales last month. This means that rental income is rising more quickly than house prices on an annual basis for the first time in two years.
The firms warned that landlords who had been targeted with a cut in tax relief in the recent Budget could end up passing on their higher costs to tenants when the reforms come into effect in 2017.
The report found that rents across England and Wales reached a new record high at £789 in June. This was 1.4% higher than the £778 recorded in May and up 5.6% on an annual basis.
Adrian Gill, director of estate agents Reeds Rains and Your Move, said: “The pedal is pressed to the metal in the rental market. Not only have rents hit a new all-time record high – but we have never seen them rise so quickly.”
Gill added that growing wage packets and a strengthening economy mean that a greater number of tenants were able to afford higher rents.
“With such an overall shortage of housing in the UK, rental costs are primarily driven by the amount tenants are capable of paying,” he said. “Rents have also decoupled from inflation. While record low inflation fuelled by falling oil prices might bring clothes or food within the range of tenants’ purchasing power, it doesn’t have much of an effect on the property market in the short term.”
Gill said that the driving force behind rent increases was the mismatch of supply and demand. “Expanding our housing stock needs to become a national priority,” he said.