Buy To Let Updated:
Latest figures from the LSL Buy-to-Let Index show that it's a positive time for landlords, with rents at record levels and the amount of tenant arrears the lowest since 2008.
Across England and Wales average rents hit £758 per month in October, representing an increase of 0.2% since September and a 1.9% increase since October 2012, putting average rents at an all-time high.
Lettings activity is also on the up with 7.4% more new tenancies in October than September, and in equally as positive news total annual returns on an average rental property have risen to 9.7%. This means a landlord could expect an average return of £15,837 per year, and if rent increases continue at the same pace this figure could rise to £24,921 per property over the next 12 months – a total annual return of 14.5%.
Happily, it seems that tenant finances are improving as well, with the total amount of late rent falling by £49 million since September – the value of arrears now stands at £245 million, representing just 7.1% of all rent, making it the healthiest month for tenant finances since LSL first recorded this measure in 2008.
This rental boom comes despite Government initiatives such as Help to Buy trying to get more people on the housing ladder, with the rental market still going strong and it proving to be a great time for BTL landlords.
David Brown, commercial director of LSL Property Services, commented on the findings:
"At a time when a seasonal slowdown would usually be expected rents are up again. The lettings market appears to be experiencing an extended Indian summer.
"While buying a home is certainly getting easier, it's the private rental market which is taking the strain for the majority of new households. With below inflation rises it is renting which is still relatively affordable in the face of struggling wage growth and rock bottom savings rates.
"The first rung of the housing ladder is still a big step up... even a 5% deposit is fast becoming a challenge for many would-be first-time buyers. For the foreseeable future a healthy private rented sector will be as critical for the UK economy as it is for those besieged every month with other household bills."
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