Research shows rents beginning to rise

Rents rose for the first time in nearly two years during June as the oversupply of properties available to let began to ease, research showed today.

Average rents increased by 0.5% or £4 during June to £823 per calendar month, although they are still 5% lower than they were this time last year, according to website FindaProperty.com.

The rise came as the number of properties available to rent eased by 0.4%, the first fall in supply for 18 months.

Rental yields, which measure rental income as a percentage of a property's value, also remained stable in June at an average of 4.56%, breaking down to 4.33% for houses and 5.24% for flats.

The rental market has been boosted by the recent pick-up in the housing market, as buyers are tempted back by record low interest rates and recent house price falls.

The pick up in sales is leading to some so-called accidental landlords, who opted to rent their home after being unable to sell it, putting their properties back on the market again, helping to reduce the current glut of rental stock.

But despite the slight reduction in properties that are available to let this month, there are still nearly three times as many rental properties on the market as there were in June last year.

Andrew Smith, head of research at FindaProperty.com, said: "There are some signs of a sustained recovery in the UK rental market and we are encouraged to see asking rents rise again and supply levels fall for the first time in 18 months.

"However, it is far too early to say that we are out of the woods yet and the UK rental market remains very sensitive to changing economic conditions.

"We would not be surprised to see an ongoing relationship between asking rents and supply levels over the forthcoming quarter as the market tries to find its level."

The research was supported by findings from letting agent Your Move, which reported a 1% jump in rents during May.

David Newnes, managing director of Your Move, said: "Now is a good time to start a lease if you're a tenant - rents are expected to rise from here on in as the housing market starts to recover.

"Many amateur landlords who were letting their properties last summer because they couldn't sell will be putting those properties back on the sales market.

"That means potentially less rental stock and more competition between renters for the best properties - rents are already rising slowly as landlords find themselves in a stronger position."