Could this positive news be the kick-start for new property investors?
Exciting news for buy-to-let investors over the last few weeks. Rents are rising, London rents are roaring back amid a surge in demand for rental properties, and Leeds Building Society has launched a new buy-to-let mortgage range with an introductory 0% interest rate.
ARLA Propertymark announces rents continue to rise
According to the latest PRS report from ARLA Propertymark, almost a third of private tenants saw their rents rise in September. The driving factors include a shortage of rental properties, as increasing costs and regulatory change deter new investors from entering the buy-to-let market.
ARLA reported that an average of four landlords per branch took their properties off the market in September. The effect is to increase tenant competition for homes, putting further upward pressure on rents.
Investors in the Midlands reap the highest yields
For the best rental yields, investors need to look to middle England, where the Midlands offers the highest rental yields, according to data from online agency yieldit. The data shows that landlords in the Midlands earn an average yield of 6.6%.
Following the Midlands, landlords in the North East, North West, Wales, North East and Yorkshire benefit from yields averaging from 5.5% to 5.7%. Lagging behind are yields in the South East and East of England at 4.4% and 4.1% respectively, while the bottom of the pile comes London where the average yield is 3.7%.
However, London yields may be attempting a comeback, according to new figures from home.co.uk.
London rents are rising fast
The latest home.co.uk data show that rents in London are rising fast, as demand for rental properties grows and supply falls.
With inflation at around 2.4%, rental price rises of 4% are helping London landlords’ finances. It appears that this level of rental increase will continue, as the number of homes in the PRS in Greater London has collapsed to its lowest in more than three years. Over the past year, the number of rental properties that have been on the market for less than 20 weeks has fallen by nearly a quarter, to less than 40,000 from more than 52,000.
This fall in rental properties appears to be attributable to the high cost of London properties, regulation and tax changes, and the lower yields available in the capital. In a report released just a few weeks later, London agent Benham & Reeves announced that new tenancies have rocketed by 22.1% in the last year, with the agent saying it expects rents to rise on the back of this demand.
Higher demand and lower supply looks likely to drive rents higher in London. Perhaps a great time to reconsider investing in buy-to-let in the UK’s leading city?
Invest with a 0% interest rate
What better way to invest in London property for rising rents, or Midlands property for premier performance yields, than with a 0% interest rate buy-to-let mortgage?
This is what Leeds Building Society is offering investors, across its new buy-to-let ‘Easy Start’ range of mortgages. It offers mortgage products at loan-to-value (LTV) ratios of 60% to 70%, with the first three months charged at 0% interest. After this initial interest-free period, rates revert to:
- 72% (with a £999 fee) and 2.82% (no fee) for 60% LTV
- 09% (with a £999 fee) and 3.24% (no fee) for 70% LTV
The three-month interest-rate-free period could help investors kit out their new buy-to-let property, build up a reserve fund, or take time to find the perfect tenants.
The more news we hear and read, the more we are convinced that the government’s attempts to squeeze landlords is backfiring. Rents are rising as landlords are seeking to cover their extra costs. Demand for rented property is rising, and supply is falling. These dynamics are most marked in London.
The launch of a 0% interest rate period on a range of new mortgages is evidence of the competition in the buy-to-let market. It may also be an ideal kick-start for new investors, providing a much-welcomed cash flow boost at the beginning of a new rental property.
Are you maximising your returns on property investment with effortless property management? Contact Ezytrac today on +44 0 1522 503 717, and discover why we’re one of the fastest-growing national investment property managers in the UK.
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