Rental prices are currently on the rise which is great news for anyone thinking of investing in a buy to let property.
The combination of a growing number of people looking for rented accommodation, plus a shortage of rental properties, is resulting in an increase in rental income for the first time since the pandemic began. The latest Homelet rental Index shows that, excluding London, the average rent in the UK now stands at £850, up 6.2% in a year.
The letting agents’ trade body Propertymark reports that the West Midlands is seeing the largest number of prospective new tenants, with agencies typically taking over 150 new registrations a month. Outside of London, rental demand has risen by over 10% since the start of the year. More and more of these people are looking for homes with extra space, both inside and out, to accommodate so-called “hybrid” working, which looks set to become the new post-pandemic norm for many. At the same time, city centre property is predicted to return to favour, particularly with younger renters as lockdown restrictions are lifted.
During the period of the pandemic, a third fewer rental properties came onto the UK market than usual, which has led to a lack of rental stock to meet the increase in demand. As night follows day, low supply and high demand means a rise in prices. Existing tenants are finding it more difficult to avoid rent rises and new tenants, faced with competition for tenancies, are discovering there is no wiggle room on price.
However, there are signs that more first-time landlords are now being tempted into the buy-to-let market, attracted by the historically low interest rates and the stamp duty holiday on the first £500,000 of a purchase. This is due to end on June 30th 2021, so anyone looking to take advantage would have to act extremely quickly.
If you would like to discuss the local buy-to-let market, contact us on 0800 862 0870 to speak to a member of our team.