Buy-to-let continues to show positive returns for UK residential landlords with rents currently showing rises at their highest rates since the autumn of 2015.
With the publication of the latest buy-to-let Index from Your Move and Reeds Rains, landlords are re-assured, after the tax shocks in the latest budgets, that their investments are underpinned by steady and rising demand. The BTL index shows that rents rose by 0.3% month-on-month in April, the fastest rate the report has recorded for six months. It has now reached an average of £793pcm across England and Wales.
Main points summary:
- Rents now rising at the fastest rate for six months, reaching an average of £793 across England & Wales
- New all-time records for three separate regions – led by the East Midlands with 8.5% annual rent rises
- Landlords see total annual returns (before costs) of 10.7% in year to April, with gross yields steady at 4.9%
- Tenants are also better able to manage higher rental payments, as rent in arrears drops to 8.1% of rent due.
Average rents for homes to let across England & Wales have now reached £793 per month, as of April 2016
On a month-on-month basis this represents an increase of 0.3% – or the fastest monthly rent rises since September 2015.
This leaves rents 2.4% higher than at the same point last year – or an extra £19 every month for the average tenant.
The strong acceleration in market rents comes after what was previously a relatively subdued month, when rents saw no change between February and March 2016.
Adrian Gill, director of lettings agents Your Move and Reeds Rains, writes:
“Anyone looking for a home to rent may now find the better deals of the winter months are over. Landlords are seeing renewed interest and competition between potential tenants, as the spring rental market accelerates.
“Some of the reasons for rent rises are extremely encouraging. Tenants looking to find a property to rent are more likely to be in work, getting pay rises, and feeling able to pay their other bills. These wider economic fundamentals are shifting on the side of healthier household finances.
“But very little has changed in terms of the supply of homes to let. So for many tenants, it’s likely that a large proportion of any earnings growth is swallowed up by higher rents. And the Government hasn’t helped by imposing an extra bill that someone will have to pay on top of this – in the form of the recent Stamp Duty Surcharge. To a large extent it’s likely that penalty will be shouldered by those tenants looking for homes to rent, due only to the fundamentals of supply and demand in the British housing market.”
Read the full report here
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