03 May MOST landlords are no better off even though rents are soaring
MOST landlords are no better off even though rents are soaring, a property expert has said.
People across the UK are currently facing higher costs to rent a property.
But Jonathan Rolande, from the National Association of Property Buyers, said landlords were “far from jubilant” about the situation.
He said: “A shortage of available stock, all part of the current housing crisis, increased demand and wage growth have all combined to allow landlords to push up rents with tenants having little choice but to pay them.
“But Landlords are unlikely to feel jubilant. “Anyone with a mortgage, which is around 60% of the 3m private landlords, will have seen the interest rate they pay rise dramatically and will not feel better off despite the rent increases. What’s more, as sale values are falling, so the rent being collected is a higher percentage of the new, lower price making yields look better despite erosion of the capital value.
As some bank savings rates approach 5% many landlords are wondering whether a gross yield, even at the higher 6.4% average as recently published by Fleet Mortgages is still a worthwhile investment once a vast array of costs including management charges, maintenance, repairs, insurances and dilapidations have eaten into the profit.
“With the declining sales market, capital growth is off the table – at least for now. This will bring into sharp focus whether Buy-to-Let is a good place to invest.”
Mr Rolande’s comments come as a new report by buy-to-let specialist lender, Fleet Mortgages revealed rental yields across England and Wales.
According to Fleet’s data, the increase in rental yields is the highest on record since the Rental Barometer was first published.
Fleet said increased yields across all regions reflected both rental stock continuing to be in short supply, very high tenant demand and house price levels easing over the last six months.
As a result, every single region had seen both an annual and quarterly increase in rental yield, except the North West and the South West which recorded quarterly drops of 0.1% and 0.2% respectively.
The North East of England continues to retain its top regional rental yield figure for the eleventh consecutive quarter, up 0.6% on the last quarter, while Yorkshire and Humberside had jumped into second place with a yield of 7.7%. Wales was the significant mover, up 1.1% annually and 0.6% quarter-on-quarter.
According to the Barometer, gross rental income now exceeded £1,000 in seven out of 10 regions, whereas a year ago, this was true for only five regions.
