Agreeing a new tenancy is 3.7 per cent more costly than 12 months ago, according to Countrywide Residential Lettings.
The increase is driven by slowing house prices and an increase in demand in London and the East of England where properties are empty for less than 14 days a year on average.
That compares to properties in Wales, the North East and the North West where they are empty for an average of 18 days a year as finding new tenants is more difficult in these locations.}
The cost of agreeing a new tenancy in London increased by 7.4 per cent annually according to Countrywide, reaching £1,299 per month on average in October 2014.
Meanwhile the UK average for sitting tenants across the UK was 1.7 per cent, significantly below the figure for agreeing a new tenancy.
This is due to tenants agreeing 12, 18 and 24 month fixed deals where the landlord does not pass on any increases to those renting.
Despite the quick turnaround times from when one tenant leaves till another is found, buy to let landlords have still been warned to consider void periods.
“While the level of demand means that the time taken to find a tenant is at a near record low, landlords should still factor in a short period when their property will be empty,” added Nick Dunning, group commercial director at Countrywide.
“While voids are often associated with the time taken to find a tenant, in stronger markets property can be re-let in advance of it becoming empty. Even in these strong markets, time to carry out repairs and facilitate a handover between tenants is a cost which needs to be factored in.”
The cost of purchasing buy to let property could also be set to increase, as Countrywide suggested last month that a 40 per cent deposit could be required under new rules for London and the South East.
Those proposals relate to Bank of England plans to alter the stress tests related to lending criteria, with around a third of landlords expected to need the higher level of deposit.
17th November 2014