Back to the future for buy to let rents and yields

Buy to let rents, yields and house prices have turned full circle as the private rental market is more or less back in the same place as when the credit crunch struck six years ago.

The only real difference is although banks and building societies are full of self-praise for how much they are lending to landlords, the total lending is running at around a third of the heady days before the property bubble burst in 2007.

The evidence that business as normal has returned comes from successive surveys by lenders, letting agents, the Office of National Statistics.

Two new studies from leading letting agent chains both claim buy to let rents have surpassed previous record levels and are heading into uncharted territory.

LSL, the company behind Your Move and Reeds Rains, says average buy to let rents in September hit £757 a month, up 2.1% on 12 months ago and an increase of 1.8% on a month earlier.

The firm?s previous record rent was £744 registered in October 2012.

Sequence, which runs Barnard Marcus, Allen & Harris and Shipways, sets the average rent at £781 a month, and reckons this is an 11% year-on-year rise.

Meanwhile, Scottish letting firm Citylets says buy to let rents an average of £687 a month, up 1.5% on September 2012, with Aberdeen returning the highest rents at £1,002 ' an 11.5% rise on last year.

The buy to let rent figures differ as the LSL only operates in England and Wales, while Sequence has offices in England, Wales and Scotland, while Citylets only trades in Scotland.

Other recent surveys, notably by the Office of National Statistics, have seen house prices return to pre-recession prices or thereabouts in most parts of the country.

LSL points out yields are rising despite the increase in house prices as rents rise alongside them.

Gross yields on a typical rental property increased to 5.4% in September, compared to 5.3% in August.

Adjusting the figure for rising home values and times without tenants, gross yields on an average buy to let home jumped to 7.4% in September, compared to 6.1% in August.

In cash terms, this is an average gross return of £12,129, with rental income of £8,164 and capital gain of £3,965.

The article Back to the future for buy to let rents and yields appeared first on LandlordZONE.

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Article courtesy of LandlordZONE
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