Posts with tag: rental yields

Rent Prices and Yields are Still Strong, According to Report

Published On: January 3, 2017 at 11:25 am

Tags: average rents,rent prices,rental yields

Rent prices and yields for landlords are still strong, as the private rental sector proves resilient to pressures on the British economy, according to Adrian Gill, the Director of Your Move.

Rent Prices and Yields are Still Strong, According to Report

“Landlords are continuing to see strong yield levels and rents are increasing, even if growth is slower than it was previously,” he reports.

Gill’s comments follow the release of the latest Your Move index, which found that rent prices increased in England and Wales by 3.9% in the year to November 2016, taking the average rent to £830 per month.

Although the rental market is cooling in London, the capital remains the most expensive place to rent a home in the country, with rents hitting a record high of £1,295 a month.

On a regional basis, rent prices rose in nine out of ten regions, led by a 13.6% annual increase in the South East, where rents now stand at an average of £875 per month.

The South West was the only region to record a decrease in rents last year, albeit slight, to an average of £656 a month.

Gill believes: “Tenants are now in a much better financial position than earlier in the year. Fewer are struggling with rent payments and this is great news for tenants and landlords alike.

“There is now a great deal of stability in the rental market, and this means there is a solid platform for growth in future months.”

Gill’s observations arrive despite the onset of a year that may prove difficult for the private rental sector.

Not only will landlords see their tax relief on finance costs restricted from 6^th April this year, the Government’s database of rogue landlords and letting agents will be introduced on 1^st October, as confirmed by ministers.

The ban on letting agent fees for tenants will also be on everyone in the property industry’s lips this year, as landlords work out how they will accommodate extra costs if the fees are passed on to them.

Gill’s comments will provide some slight relief to investors, who may have feared that 2017 will be tough on their finances.

Average rents fall in October-but yields remain strong

Published On: November 24, 2016 at 12:57 pm

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,buy-to-let landlords,rental yields,rents

The latest figures from letting agents Your Move have suggested that private rents dropped slightly in October. However, buy-to-let landlords are continuing to see significant yields.

Data from the report indicates that rents in England and Wales slipped from a record high of £907 pcm in September to an average of £900 in October.

Sustained yields

Despite the slight falls, buy-to-let landlords are continuing to see significant yields.

Wales saw the largest annual growth, with rents going up by an average of 8% year-on-year to hit £591pcm.

Other regions with strong rental growth include the East Midlands and the East of England. Rents in both of these areas rose by an average of 6% year-on-year to hit £628pcm and £856pcm respectively.

London is still the region with the largest rents, typically £1,290pcm. This is a marginal rise of 1% annually.

Average rents fall in October-but yields remain strong

Fall

The only region to see rents fall was the North East of England, where rents fell by 1% year-on-year to hit an average of £541pcm. Rents in the South West remained unchanged, staying at £668pcm.

Director of Your Move, Adrian Gill, said: ‘After a turbulent year for the economy it is no surprise the rental market has paused for breath this month. Despite economic uncertainty and the European Union referendum result, the lettings market has powered through the year so far.’[1]

‘The underlying market remains strong and we expect growth to resume in future months. Landlords continue to see impressive yields and the UK property market continues to be a safe and secure place to invest,’ Mr Gill concluded.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/average-rents-drop-but-landlords-continue-to-see-impressive-yields

Investors to look outside London for growth spots

Published On: November 16, 2016 at 12:57 pm

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,capital growth,investors,rental yields,rents

A new survey has revealed that investors will look outside of the capital during 2017, as other regions continue to grow.

The investigation from RSM revealed that over half of respondents feel property prices in London will rise in 2017, albeit at a slower pace than previously. One third said prices would stay constant, while 14% anticipate a fall.

Outside capital growth

When asked to name which region outside of London will see the highest growth in 2017, the South East was most popular, with 28%. The North West recorded 18% of votes, while the South West and West Midlands came joint third with 11%.

61% said that the spiralling cost of housing in London and the South East will generate further growth in the sector.

For those responding to the impact of interest deduction plans, opinion was divided. 38% said there would be no change on residential real estate acquisitions. 37% thought the number would reduce.

Nearly two-thirds forecast overseas investors to continue to be prominent, accounting for 30 and 60% of the total commercial property investment in 2017.

70% of those questioned said they anticipate the cost of borrowing to stay the same, whole 8% feel rates could fall further.

Investors to look outside London for growth spots

Quiet optimism?

Howard Freedman, RSM’s head of real estate and construction said: ‘2016 has been an eventful year for the UK real estate sector. There was significant growth in 2015 with a considerable number of deals concluding throughout the year. At the beginning of 2016, however, the sector paused for breath. Transaction levels started to fall amid concerns that the market was topping out. The EU referendum added further uncertainty and changes to Stamp Duty Land Tax rules and updates to income and inheritance tax also cooled the residential market, particularly in Central London.’[1]

‘Our latest survey shows that despite these setbacks, there is a degree of optimism around price growth in 2017, with a renewed interest in the prospects for the UK regions. There is of course concern around a lack of investor interest following the Brexit vote, but our survey suggests that over the long term the UK real estate market remains one of the more favourable opportunities for both domestic and overseas buyers,’ he continued.[1]

Concluding, Freedman noted: ‘Now more than ever, investors and developers must focus on the fundamentals of property investment: location, sub-type and quality of tenant. Those that hold their nerve and stick to these principles will reap the biggest rewards in the year ahead.’[1]

[1] http://www.propertyreporter.co.uk/finance/property-investors-predicted-to-look-outside-the-capital-for-growth-in-2017.html

Rental yields might not be a measure of success

Published On: November 9, 2016 at 2:55 pm

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,rental yields,rents

A leading market peer has stated that traditional measures of gauging buy-to-let success are changing.

Property expert Kate Faulkner suggests that rental yields are not necessarily a key indicator of a successful investment.

Appreciation

Faulkner believes that falling capital appreciation and small rent rises in many regions have led many yields to improve.

However, she feels that other factors and obstacles obstructing landlords making profits are not being taken into account. These include costs to landlords covering:

health and safety
energy efficiency
reduced tax benefits
phased cut in landlords mortgage interest tax relief

Rental yields might not be a measure of success

Writing in her latest Propertychecklists newsletter to clients, Faulkner said: ‘Although yields are a useful measure when buying, they won’t help landlords understand the impact of lower profitability levels moving forward. It is essential that landlords who have posted their tax returns now take these to a property tax expert to understand the future viability of their investment and to know if they are likely to have to put money in.’[1]

Warning

In addition, Faulkner issued a warning for investors in the North of England. She said that those taking advantage of low purchase prices and better capital yields should future-proof their profitability by making sure capital growth is secure when they buy, in comparison to relying on natural price growth to deliver their returns.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/yield-no-longer-the-key-measure-of-buy-to-let-profitability-says-lettings-expert

Where in London can you achieve the best yields?

Published On: November 2, 2016 at 11:39 am

Author: Em Morley

Categories: Landlord News

Tags: buy to let investors,Buy-to-Let,landlords,rental yields

An investigation from Simply Business has indicated that more than 70% of buy-to-let investors prioritise rents over capital gains when making purchase decisions.

Taking this into account, London based residential agent Portico has revealed which capital locations command the greatest rental yields.

Capital rental gains

The agent’s Interactive Yield Map has shown that the top-ten areas in London for highest rental yields are:

Elm Park, Havering-Highest yield 8.5%

London’s greatest yield can be found in Elm Park in the east London borough of Havering. With rents increasing in the capital, a number of people are moving out of the city to the outskirts, in search of more affordable places to stay. Havering has seen a double-digit growth in the last year.

Chadwell Heath, Barking & Dagenham –Highest yield 8%

Again in East London, Chadwell Heath offers a very good yield and prospects of growth. What’s more, it shares the honour of the only place alongside Havering to achieve double-digit growth in the last year.

The Crossrail will be ready for arrival at Chadwell Heath railway station in May 2017, driving a number of commuters to the region.

Creekmouth, Barking & Dagenham-Highest Yield 6.8%

Despite being an industrial region, a yield of 6.8% is certainly not to be sniffed at. Creekmouth attracts tenants searching for convenience and value for money, despite not having its own Tube.

Little Heath, Redbridge-Highest yield 6.6%

This region is not far away from Chadwell Heath and is attractive to renters looking for great schools, greenery and period housing. In addition, the Crossrail will also increase Little Heath’s desirability.

Where in London can you achieve the best yields?

Yarnton Way, Abbey Wood-Highest yield 6.6%

The Crossrail scheme has led to regeneration work in Abbey Wood, which is scheduled for arrival in 2018. Savvy investors are already purchasing in the area.

Barking-Highest Yield 6.5%

Barking has been in the public eye since the 2012 London Olympics, where it was host borough. A number of projects have served to renovate the area since then, including building shops, homes and leisure facilities.

Cranbrook, Ilford-Highest Yield 6.1%

Ilford is set to become another region to highly benefit from the Crossrail scheme, when it appears on the Tube map next year. Homebuyers and investors will be attracted to a quick commute into the city, alongside cheaper prices.

East Ham-Highest Yield 6.1%

East Ham has benefitted hugely from the investment in the Olympics. It is a very popular location for first-time buyers with a strict budget. Now, it is attracting a number of tenants, due to its good transport links and bustling high street.

Romford-Highest Yield 5.9%

Property values in Romford have risen sharply in recent years, but the region remains affordable compared to the rest of London. As such, it is still a popular location for investors and tenants.

Chigwell-Highest Yield-5.8%

Chigwell now benefits from the Night Tube, attracting a number of young professionals to the area. Landlords and investors can expect yields to remain strong and even grow in the long-term.

Student check-ins drive rents to record highs

Published On: October 13, 2016 at 8:53 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,rental yields,rents,students

Rents in England and Wales soared to record highs in August, as a result of a surge in student check-ins. Average rents now stand at £887, according to the latest Your Move England .

Seasonal soars

This figure is the highest recorded by the firm, with the pre-referendum slowdown all but over. There was definitely a seasonal influence driving the rents upwards, caused by a rise in students returning to their studies.

In particular, this rise has been noticeable in London, the South East and the North East.

August rents were 8.7% greater than those seen at the same period in 2016. This is in contrast to June, when average rents fell by 2.4%.

Capital increases

The Index also found that it is on average 30% cheaper to rent in the South East than in London.

While the capital has long been the catalyst of rent increases in the UK, other regions are now starting to surpass London. Rents in the capital rose by 6.9% year-on-year to August, to hit an all time level of £1,391.

However, this performance was bettered in the South East, with data suggesting that students drove this record high. With this said, it is unlikely that rents will continue to rise at the same level until the end of the year.

Surprisingly, the North East also saw more increased rental growth than the capital. Rents in this region were up by 12.3% year-on-year.

Student check-ins drive rents to record highs

Moving forwards

Adrian Gill, Director of lettings agents Your Move, noted: ‘The rental market appears to have left any uncertainty about the market behind with prices across England and Wales again reaching record highs. London continues to be home to the highest rents but other areas such as the North East and South East are witnessing even stronger levels of growth over the year-demonstrating the seasonal impact of the student market.’[1]

‘Yields have picked up following a gentle decline in recent months, something which landlords will no doubt watch with interest over the next couple of months,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/students-drive-up-rents-to-record-highs.html