Buy-To-Let Property Investors Benefit
From PRS Rent Increases
The average rent in the UK’s private rented sector has increased to approximately £757 (GBP) per month, the highest level ever recorded, as rental prices increase by 1.8% on the previous month.
The data is from the latest Buy-To-Let Index, published by LSL property services.
PRS rents are 2.1% higher than they were in September 2012 and tenant demand is still strong with lettings activity growing by 9.2% over the last 12 months.
Average PRS rents are now £13 (GBP) per month higher than the previous all time record set in October 2012, when monthly PRS rents averaged £744 (GBP) per month.
Nine out of 10 UK regions saw rents rise between August and September 2013 with the fastest monthly rise observed in the South East, where PRS rents are 3.3% higher than they were a month ago.
The North West region saw a 2.7% monthly rise in rental prices, followed by the West Midlands at 2.6%. The only region to see lower PRS rents in September 2013 was the East of England with a 0.8% monthly drop in rental prices.
When the figures are examined on an annual basis, the East of England was also the only region to see lower rents, down 1.4% since September 2012. However, the latest wave of rent increases take London private rented sector rental prices to 4.4% higher than they were in 2012, followed closely by 3.1% increase across Wales and a 2% increase in the West Midlands.
Seven out of 10 UK regions have seen PRS rental prices reach individual all time record highs. PRS rents have never been higher in
- West Midlands
- East Midlands
- North West
- Yorkshire and Humber
- South East.
The only UK regions that have not exceeded the previous record highs for PRS rental prices are
- North East
- East of England
- South West
David Brown, commercial director of LSL Property Services said: “A new peak in tenant demand has driven rents to new heights, well above all previous records. Higher rents in almost every region show that, despite government schemes, buying a first home is still a difficult aspiration. This is not only down to low salary growth, but also a general shortage of supply which is the underlying reason why homes are getting more expensive. The long term trend to renting therefore looks unlikely to change significantly in the near future, despite the better availability of finance compared to previous years. Landlords have benefitted from strong yield growth for some time but with such a reignited purchase market, there’s now more of a ferocious incentive to invest in the private rented sector than ever before. We expect rental yields to hit 5.5% by the middle of this decade which alongside the recent trend for price rises, gives every indication the next 12 months are set to heat up even further”.
The latest Buy-To-Let Index from LSL also shows that gross yields on a typical rental property have also increased, up by 0.1% since August 2013 to 5.4% in September, compared to 5.3% in August.
Even after taking into account capital appreciation, void periods between tenants, property maintenance and repairs, the total annual return on an average private rental sector property increased to an average of 7.4% in September, compared to 6.1% in August.
In real terms this represents an average rental property return of £12,129 (GBP), with rental income of £8,164 (GBP) and capital gain of £3,965 (GBP).
If rental prices continue to rise at the same pace as they have over the last three months, the average UK property investor could make an annual return of 13.6% from a single buy-to-let property over the next 12 months, equivalent to £23,028 (GBP).
With very strong tenant demand and predicted profits exceeding £20,000 what are you waiting for?
CLICK HERE To read a very useful, informative and motivating property investment article explaining why there will never be a better time to buy property in the UK!
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