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Landlords expecting to raise rents in 2014

Landlords expecting to raise rents in 2014

Category: Buy To Let

Updated: 30/01/2014
First Published: 30/01/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The latest landlord sentiment survey from LSL Property Services has revealed that 42% of landlords are expecting to raise rents in the next 12 months, with the average increase set to be 3.7%.

The vast majority of those expecting to increase their rent (56%) indicate that they'll be doing so to cover the cost of inflation, with maintenance work and increased insurance costs being next on the list of reasons.

Currently, according to the latest LSL Buy-to-Let Index, rents are rising at an average annual rate of 1.5%. Despite this, tenant demand doesn't seem to be slowing down – lettings activity is experiencing ever-stronger growth, with falling void periods and the number of new tenancies agreed in December being 7.7% higher than the same month in 2012.

This all helped average yields reach 5.3% in December, while total annual returns on a rental property increased to 8.8% – up from 8.3% in November. This, according to expert analysis, is as a result of a significant growth in property prices, with improved returns reflecting improved market confidence as a whole.

David Newnes, director of LSL Property Services, comments on the latest findings:

Even with an increase in rental properties available, demand in the private rental sector continues to outstrip supply in many areas, especially in London.
In the months ahead, this will enable landlords to push up their rental prices when
letting their properties, putting a stop to inflation eating into their rental income.

"Rising rents are delivering strong yields to investors, making a powerful case for the rental market for those in search of a beneficial, long-term investment… Overall there's an air of optimism surrounding the rental market now that inflation is firmly back on track as wage expectations start to improve. A rise in affluent tenants will help further boost the success of the private rental sector this year."

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