13th
Jun 2016
A national lettings agent buy-to-let index shows that landlords are starting to lower their rents, as the frenzied landlord purchasing in March has put more rental properties into the market.
According to the buy-to-let index, England and Wales rents’ for ‘homes’ have dropped by an overall average of 0.2% in May against April’s, the average monthly rent now stands at £792.
However rents are still higher than in May 2015 by 1.8%, which is half the 3.6% annual rate that was reported in January .
Director of lettings for the chain, Adrian Gill is quick to point out that this is only a short term phase, as the number of available rental homes increased drastically from March onwards.
Gill said: “This is the equivalent of a flash flood for the rental market.
“Just a month ago rents were heating up and spring was in the air – but this has been put on hold as a tide of new properties to let has disrupted the normal dynamics of supply and demand.”
Further investigation of the data shows that in the Capital rent increases fell to 1% from May 2015 to this May. London landlords had previously enjoyed their highest level of rent increase of 11.5% in September 2015, year on year.
However the East Midlands did well as it has enjoyed rent increases of 7.3% over the year; with the West Midlands recording 5.5% annual rent increases and the East of England of 3.6%.
In spite of May’s blip, rental yields are still strong down to property prices experiencing the same downturn in May. Before taking into account void periods and other factors, the gross yield of an average rented property in England and Wales stood at 4.9% in May, which was the same in April.
England and Wales properties that were rented out as homes on average gave landlords a total return of 10.2% for the twelve months up to May, slightly lower than the 10.7 % for the twelve months up to April.
It has been estimated that the average landlord in England and Wales, has seen a gross return of £18,769 over the last year, before deducting any monies for maintenance and mortgages. The average capital gain is guesstimated at £10,057 with a rent contribution of £8,712 over the twelve months to May.
Adrian Gill concludes: “Landlords are vital in matching an escalating demand for homes from tenants. Such a scale of demand doesn’t look set to change dramatically just because of a few tax tweaks – so professional and accidental landlords will always be an essential part of the solution. Financial rewards for investing in property, taking on risk and maintaining homes will have to reflect the importance of landlords for our economy and our society.”
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