Buy-to-let
Rents have climbed to reach an all-time record high as the rental market approaches its autumn peak, according to Your Move and Reeds Rains.
Data from the lettings agents networks shows the average residential rent across England and Wales is now £761 per month.
This is £3 higher than the previous record £758 set in October 2013.
On a monthly basis August rents are on average 1.1 per cent higher than was seen in July – or an increase of £8.
Monthly rents are now 2.4 per cent higher than a year ago.
David Brown, commercial director of LSL Property Services, comments: “No year is the same, and already 2014 has been like no other. The reawakening of mortgage lending startled the property market into a new spring of life earlier in the year.
“The benefits have been felt across the board, not just for first-time buyers but for tenants too. Investment means rents are now only 1 per cent higher in real terms than at the start of 2010.
He adds: “Landlords have benefited from higher property prices, which is helping portfolios to expand and more homes become available to let. Gross rental yields are still in line with long-run averages, and rental income is more reliable as personal finances gradually leave the great recession behind them.”
Tenant Finances
Tenant finances experienced a setback last month; with the proportion of late rent standing at 8 per cent in August, up from 7.3 per cent in July – an increase of £27 million of rent in arrears.
On an annual basis the setback is less severe, up 0.2 percentage points compared with August 2013 when the equivalent figure was 7.8 per cent; an absolute increase of £16 million, leaving the total amount of unpaid rent across England and Wales at £279 million.
Yields and Returns
Taking into account price growth and void periods between tenants (but before costs such as mortgage repayments or maintenance) total annual returns on an average rental property stand at 12.7 per cent over the twelve months to August.
This is up from 6.4 per cent in the year to August 2013, and an increase of 0.6 percentage points since July, when returns were 12.1 per cent.
This means the average landlord in England and Wales has seen a return, before deductions such as mortgage payments and maintenance, of £21,239 in the last twelve months – made up of rental income of £8,233 and an average capital gain of £13,006.
If rental property prices continue to rise at the same pace as over the last three months, the average buy-to-let investor in England and Wales could expect to make a total annual return of 17.2 per cent over the next year, equivalent to £30,997 per property, LSL says.
