Year Ends with Another Rental Price Drop

20 January 2012 Categories: News

Figures released yesterday as part of LSL Property Services’ buy to let index show that 2011 ended with the second monthly rental price drop in a row. According to the index the average asking rent fell by 0.8% to £711; so making the total drop for November and December 1.2%. This end of year phenomenon occurs most years however and is generally attributed to seasonality.

Even with this drop, average rents through the course of 2011 still increased substantially. London saw the biggest annual rental increases for buy to let landlords at 5.6% but the East and South East of England weren’t far behind with 5.0% increases. Only two regions, namely the North East and South West, saw overall drops in asking rents, with figures of 1.3% and 1.2% respectively.

Many of the figures released in this month’s index were expected, including the increase in rental arrears during the month of December. Tenant finances are known to suffer during the Christmas period and as predicted the number of rental payments received late or that remain unpaid rose from 9.3% in November to 10.7% in December. Countrywide this equates to over £300million of rent arrears.

When asked about this second rent drop and what it might mean for the rental market David Whittaker, Managing Director of Mortgages for Business, said that in his opinion the drop was nothing to worry about; “The seasonal lull in demand impacted average rents towards the end of 2011, but demand will be robust over the first few months of 2012 which will help strengthen prices.”