Zoopla Property : Average rents soar at fastest rate since 2011

What's the latest?

Rents rose at their fastest rate for four years in 2015 to stand at nearly £800 a month.

The typical cost of being a tenant in England and Wales jumped by 3.4% during the year to £794 in December, according to estate agents Reeds Rains and Your Move.

The rise was the biggest increase for a full calendar year since 2011, when rents rose by 4%.

However, monthly rents fell back slightly from their peak of £816 in September.

Why is this happening?

Rents are being driven higher because the supply of rental homes is failing to keep pace with demand. They are also being boosted by rises to average earnings.

Adrian Gill, director of Reeds Rains and Your Move, said: 'Last year demonstrated how the cost of renting a home has begun to diverge from the wider cost of everyday living, as measured by standard rates of inflation.

'This showed that maintaining the success and the current affordability of private renting will depend on the main issue at hand - getting more properties onto the market.'

Who does this affect?

Rising rents are obviously bad news for tenants, including potential first-time buyers who are struggling to get on to the property ladder.

But they are good news for landlords, particularly in the face of some of the recent tax changes that will impact the sector.

Typical rental yields currently stand at 4.9%, before taking into account factors such as vacancy periods, down slightly from 5.1% in December 2014.

If both rental income and capital growth is taken into account, landlords actually made a total return of 11.3% last year on average.

This is the equivalent of £21,110, before deductions for property maintenance and mortgage repayments, with £12,438 coming from rents and £8,672 coming from capital appreciation.

Sounds interesting. What's the background?

'Last year demonstrated how the cost of renting a home has begun to diverge from the wider cost of everyday living, as measured by standard rates of inflation.'

The largest rise in rent was in the east of England, where it increased by 7.8% to an average £831 a month.

The region was followed by London, where a 6.3% jump took the average monthly rent to a whopping £1,251.

Meanwhile, rents in Yorkshire and the Humber and the West Midlands hit all-time highs in December - at £556 and £593 a month respectively.

Perhaps unsurprisingly, tenants felt the pinch at Christmas, with arrears rising to 9.3% of all rent due.

Top 3 takeaways

• Rents rose at their fastest rate for four years in 2015.

• The typical cost of being a tenant in England and Wales jumped by 3.4% last year to £794 a month.

• But monthly rents have fallen back slightly from the peak of £816 they hit in September.

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