Rents hit record high

Graham_Devon

Rents in England and Wales rose by 0.7% in June to reach a new record high of £701 per month in June, pushing annual rent inflation to 4.1%. In London, rents broke through the £1,000 a month barrier for the first time, rising by 1% to reach a new high of £1,006 per month.

The latest LSL Property Services Buy-to-Let index shows that rental properties in London can be snapped up within a day of being advertised and there isn't enough rental property to match the soaring demand.

During the past year London rents climbed faster – 6.9% – than any other region of England and Wales, while steep increases were also experienced in the North East and the West Midlands, where rents increased by 5.1% and 4.6% respectively. In the past year, the only region in which rents fell was the east of England – by a marginal 0.3%.

Month on month, rents increased fastest in the West Midlands and the east (2% and 1.6%) and fell in only three regions: the east Midlands (-0.5%), the south-east (-0.2%) and Yorkshire and the Humber (-0.1%).

http://www.guardian.co.uk/money/2011/jul/15/rents-record-high-housing-demand

Apparently, according to those in the business, this won't stop, or even slow down. They even go as far as saying "in the long term there is even less chance of this slowing down". Which is pretty brave.

BUT...the average return on a BTL property, is currently just 1.3%, or £2,203 a year.

peakoil_2

Graham_Devon wrote: »

BUT...the average return on a BTL property, is currently just 1.3%, or £2,203 a year.

how is the return on a BTL calculated? I assume it is the money left over after costs and mortgages but is that interest only mortgages or repayment mortgages?

if its repayment mortgages, then its not so bad because the return will increase year on year with both reduction in mortgage costs and increase in rents. if its an interest only then the only way to increase returns in rental increases.

angrypirate

At a time when the market is sluggish and short of FTBs, all this does is reduce the amount of money they are able to save each month, meaning it takes longer for the FTBs to get together their deposit. This is turn will mean that there is an ever dwindling number of first time buyers looking, stalling the housing market further. Something is going to have to give sooner or later.

peakoil_2

or its an incentive to stop paying rent and get out there and buy a house before the dirty BTLers snap them all up with their blood money profits. blah...blah...empty rhetoric..blah..blah..

geneer

Rents hit record high...in London.

Really2

geneer wrote: »

Rents hit record high...in London.

Rents in England and Wales rose by 0.7% in June to reach a new record high of £701 per month in June

and in the UK?

IronWolf

How du calculate return on BTL? Is it income & increase in equity as a percentage of the mortgage deposit + other money invested?

Thrugelmir

Graham_Devon wrote: »

BUT...the average return on a BTL property, is currently just 1.3%, or £2,203 a year.

Which makes top line rents a meaningless number.

As its possible for a higher profit to be achieved in the future on a combination of lower house prices , lower rent and higher interest charges.

The current high demand for rental property is just another phase of the property bubble unwinding.

geneer

Really2 wrote: »

and in the UK?

fell in three regions: the east Midlands (-0.5%), the south-east (-0.2%) and Yorkshire and the Humber (-0.1%).

pretty sure these are part of the uk.

HAMISH_MCTAVISH

"We've had five successive months of rent rises, but there is no sign of a let-up anytime soon. Despite several new deals on the market, securing a big enough mortgage remains a tall order for the average buyer. The climbing cost of living and renting is impacting how much renters can save for their deposit, and demand will remain high in short-term.

"In the long term, there is an even smaller chance of a significant slowdown. Just 102,570 new homes were completed last year – at a time when the UK's population increased by nearly half a million. This trend shows no signs of slowing. Excess demand will be driven into the private rental sector driving rents up further. Landlords thinking long-term will do well."

Absolutely inevitable consequence of rising population, insufficient house building and mortgage rationing.

Loughton_Monkey

Come back Peter Rachman. You are a demi-God. All is forgiven......