The private rented sctor is “pulsing with demand”, according to Your Move and Rains, whose latest buy-to-let index reveals that rents have climbed to a new record high. The average rental rate is now £700 per month, 1.5 per cent higher over the past 12 months, the equivalent of £12. This marks a slowdown in growth compared to one year ago, when rental growth reached 3.4 per cent in the 12 months to October 2013. Nonetheless, rates are higher than 12 months ago in nine out of 10 regions in England and Wales.
Despite this record figure, though, tenant finances are improving, with levels of late rents now just 0.3 per cent above all-time lows.
“The rental market is pulsing with new demand,” says David Newnes, director of Your Move and Reeds Rains. “Yet at the same time, tenants are getting on top of their finances – helped by a cooling pace of such rent rises.”
“Beter affordability is good for tenants in the longer run too – and for landlords who can rely on steady revenue to pay the bills. That helps to support a virtuous cycle of only gradual rent rises. Alongside slower overall inflation, a material boost to the supply of properties available to let has helped keep rents from rising as quickly as in previous years.”
For landlords, gross yields have dipped as house price growth outpaced rental rises, but yields have now steadied again, according to the estate agency’s research, which means buy-to-let investors will face lower risks of voids and arrears. A typical landlord in England and Wales can expect to make a total annual return of 11.2 per cent over the next year, equivalent to £20,520 per property, says Newnes.
“Good news on the affordability of renting is good news for the whole industry,” he concludes.
Source: The Movechannel