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Rental Yields Drop As UK Residential Property Prices Rise

Rental Yields Drop As UK Residential Property Prices Rise

Property Price Increases Wipe Out Landlord Rental Yields

Residential property prices are rising so fast that they are outstripping rental price increases and some private sector landlords’ rental yields are suffering.

Landlord rental yields in the UK private rented sector (PRS) have fallen almost everywhere in the UK, and any rise in the rental prices are being outpaced by rising residential property prices.

Countrywide have said that in May 2013, rental yields declined everywhere in the UK except in the East of England (up 0.2% to 6.2%) and Scotland (up 0.1% to 5.8)

Rental yields in the South-West and the Midlands remained the same at 5.7% and 6.5% respectively. The greatest rental yields in the UK PRS are being achieved by landlords who own rental properties in Wales (6.6%), the Midlands (6.5%) and the North (6.4%).

Average monthly rents on two- and three-bedroom properties in the UK private rented sector increased up by 0.5% and 0.3% in May to £770 (GBP)and £884 (GBP) respectively, but rental prices for one-bed properties fell by 0.6% to £674 (GBP) and rents on four-bed properties were also down by 2.1% to £1,363 (GBP).

Wales had the greatest increase in average monthly rental prices, up 4.9% on April 2013, followed by Scotland (up 2.2%), the North (up 1%) and South-West (up 0.5%).

Despite some regional increases, the average monthly rental price in England, Scotland and Wales fell by 0.2% in May 2013, but rents are still 0.8% higher when viewed year-on-year.

The Midlands has seen the greatest decrease in average monthly rents, down 1.4% month-on-month, followed by the South-East and central London, both down 1.3%. Scotland has the lowest average monthly rent at £617 (GBP) per calendar month (pcm) and central London the highest at £2,340 (GBP) pcm.

Countrywide have taken their data from over 5,000 rental properties in the UK.

Nick Dunning, Commercial director at Countrywide said: “Despite the decrease in yields in May, rental yields remain strong and are providing attractive returns for buy-to-let property investors compared to other types of investment.”

ARLA Calls For Rental Regulation In England

ARLA Calls For Rental Regulation In England

Government Urged To Rethink PRS Regulation

The Association of Residential Letting Agents (ARLA) wants the Government to bring England in line with the rest of the UK by calling for greater regulation of the private rental sector to better protect tenants.

ARLA argues that tenants in England could soon be less well protected than their Scottish and Welsh counterparts, due to the delay by the Government to introduce laws allowing for better regulation of the lettings industry.

According to data released by ARLA, 36% of all households in England are in private sector rented accommodation and the lack of regulation of the Private Rental Sector (PRS) is fast becoming an issue that affects more of the population than ever before.

The Scottish government reviewed its strategy for the PRS on the 30th May, while the Welsh government is set to introduce a Housing Bill legislating for a compulsory licensing scheme for all letting agents in Wales, as well as a code of practice, before the end of the 2012/13 Assembly term.

The announcements by Scottish and Welsh parliaments are in stark contrast with the current UK Government’s stance of opposition to regulation of the Private Rental Sector because of an apparent fear that landlords will become bogged down and put off by having to wade through a mountain of red tape.

On the surface this seems incredibly thoughtful of the Government, however, it is not to be forgotten that they also intend for all landlords to become unpaid agents for the UK Border Agency policing the immigration status of all tenants. No matter how watered down that proposal becomes the intent of those in power was made clear – to tap into powerful resources to save themselves money. It does make you wonder if the reluctance for regulation is simply because the Government can’t find a way to financially benefit from introducing new regulatory legislation at this current time.

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