Home Business News Soaring rental rates cheer buy-to-let investors

Soaring rental rates cheer buy-to-let investors

by LLB Editor
16th Dec 11 10:20 am

Rental rates in London have soared over the last year as properties in the capital continue to look like a good purchase for buy-to-let investors, according to a report.

Rents in London and the South East have gone up by 4.2 per cent in the last 12 months, more than any of the other regions in England and Wales, LSL Properties’ Buy-to-Let Index shows. But the rate of annual rent increase in London has slowed by 1.5 percentage points on October’s figures, when it was 5.7 per cent.

Read: A nation of landlords?

The average monthly rent in the capital increased by 0.3 per cent in November to reach £1,033, meaning tenants are now paying £41 a month more than they were in November last year.

Rental rates in London remain significantly higher than other regions of the country, with the average monthly rent in England and Wales standing at £717. The East of England has the second highest monthly rent at £744, while tenants in the North East pay the least at just £514 a month.

LSL Property Services commercial director David Brown said: “Following their relentless march upward throughout the year, rent rises have taken a pause for breath.

Landlords are looking to avoid having properties vacant over the Christmas period, and can be less aggressive with pricing as tenant activity slows in the run up to the New Year. But across the country, the limited supply of rental accommodation means there will still be strong upward pressure on rents in the early part of 2012.

“The government missed a golden opportunity in the autumn statement to give the private rented sector a fillip, and encourage the investment needed for the long-term supply of rental homes to match demand. Extending the stamp duty holiday to buy-to-let investments would have removed a financial obstacle in the path of new investors, easing the strain on the current limited stock of properties.”

Rental yields have increased to 5.2 per cent in London, up from five per cent at the same point last year. Rental yield is the amount of income an owner receives per year expressed as a percentage of the property’s value.

However, the highest rise in rental yields can be found in the North West, where yields have soared to 7.1 per cent in November from 6.4 per cent in the same month last year.

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