Buy-to-let rents increase to all-time high

Landlord rents rose 5.2%, to an average of £846 in July in the UK. The biggest increase took place in south-east England, with costs going up by 15% to £924. Adrian Gill, director of ‘Your Move’, has been quoted as saying that the Brexit decision has not caused, “any immediate change in the rental market”. It seems that for many investors in buy- to- rent it is business as usual. The market’s worries over Brexit are calming, and the Bank of England’s move to cut the base rate for the first time in seven years will no doubt have an impact on investors.

Entry price points remain accessible and continue to offer the kind of returns that portfolios require. It is expected that prices, although at an all-time high, may slow down their rate of increase, partly because of the government’s 3% stamp duty tax changes this spring.

Adrian Gill also questioned landlords concerning any intended decisions to continue buying, or waiting to add to their portfolios. According to the Your Move report, almost 72% of landlords surveyed were most likely to add to their stock and buy more properties.

It seems that the continued demand for rental property is still surpassing the available supply, at least in many areas. The Royal Institution of Chartered Surveyors (RICS) has endorsed this notion by suggesting that the availability/demand incongruity is expected to force rents higher. This has been exacerbated by a reduction in the quantity of new properties available for renting.

Property prices will see an average rise of 6% over the following year, according to (RICS) forecast for 2016. Transactions are also expected to edge up to around 1.25 and 1.3 million, slightly higher than last year’s figures. This rise could be more noticeable in other parts of the country. London is likely to show a lower rental growth, due to the already high cost of renting. Houses in major cities such as Manchester and Liverpool and desirable regional areas are likely to see bigger increases. Availability issues are definitely different depending on the region, some show a 40% higher availability ratio than 2015, whilst prospective tenants have risen by 7.2%.

If supply increases over the coming year are faster than demand, then there will be a turning of the tables. Tom Bill, of Knight Frank’s, suggests landlords will have to be more flexible in their tenant negotiations over issues of rent clauses, repairs to the property, and payment arrangements.

In general there seems to be a degree of calm in the property market at the moment, although nobody is sure about the evolving situation. But it does not seem to have affected the market as much as people feared.
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