According to the latest Buy-to-Let Index from LSL Property Services Plc rents have hit a record high in June and have broken the £700.00 per month barrier for the first time. The increase has seen the average rent increase by £28.00 per month compared to June 2010 and an average yield of 5.2 per cent, up by 0.1 per cent on May’s figures.
Average rents in London have also reached a record high with landlords seeing an average of £1,006.00 per month, an annual increase of 6.9 per cent. Despite the increase total annual returns have dropped to 1.3 per cent but over the next 12 months an investor could see a total annual return of 2.3 per cent.
The rental market is looking much improved as tenant arrears dropped by 18 per cent as the total amount of late rent or unpaid rent fell from 11.5 per cent to 9.3 per cent. In the last 12 months the only area to see a fall in average rents was the East of England, falling by 0.3 per cent.
David Brown, Commercial Director of LSL Property Services, comments:
“Tenant demand continues to reach ever higher peaks — and there simply isn’t enough rental property coming onto the market to match it. In areas like London where competition for rental property is most intense, it’s not unheard of for rental properties to be let within a day of coming on to the market. We’ve had five successive months of rent rises, but there is no sign of a let-up anytime soon. Despite several new deals on the market, securing a big enough mortgage remains a tall order for the average buyer. The climbing cost of living and renting is impacting how much renters can save for their deposit, and demand will remain high in short-term.
In the long-term, there is an even smaller chance of a significant slowdown. Just 102,570 new homes were completed last year — at a time when the UK’s population increased by nearly half a million. This trend shows no signs of slowing. Excess demand will be driven into the private rental sector driving rents up further. Landlords thinking long-term will do well.”
Despite the doom and gloom of the housing market it looks like bricks and mortar is still the way to go for investors.
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