The property market is still in a state of flux as buy to let rents, wages and house prices are all on the up, according to research by landlord insurance specialists.
Average rents have climbed 7.5% year on year – with the average buy to let rent in the UK standing at £846 a month.
Meanwhile, tenants can more easily afford rising rents as wages have increased an average 1.7% during the past 12 months. Private tenants moving into a buy to let home in May earned an average 7.2% more than those moving in during May last year.
Increasing house values of 10% over the year are also forcing more people to rent a buy to let home as the price of a property starts to pull further away from what they can afford to pay as a deposit.
The figures come from a buy to let market analysis by Homelet.
Spokesman Martin Totty explained that rising buy to let rents were outpacing wage increases, but financially better-off tenants were squeezing lower earners out of the market.
“The buy to let sector continues to see strong demand with tenant incomes taking on new properties rising in line with the rents charged by landlords,” he said.
“It remains to be seen if anticipated central bank intervention in the mortgage market will stimulate further demand in the private rental sector at the expense of home ownership, and whether this will generate positive response from would-be buy-to-let landlords channelling some of their newly freed-up pension savings into investment property.”
Totty also explained rent rises varies across the regions – with those in London (10.7%) and the East Anglia (9.4%) racing ahead of the rest.
“With the buy to let sector playing an ever more important role in the UK’s housing market given the pressures on would-be purchasers, it is vital that rents remain affordable while still offering attractive returns to landlords,” he said.
“There is good reason to think rental property will become even more predominant, so it will be crucial to continue to monitor the relationship between income and rents.”