You are here: Home - Mortgages - Buy To Let - News -

Landlords see record returns from buy to let property

0
Written by: Paloma Kubiak
19/02/2016
Landlords have seen returns from buy to let properties rise to their highest level since 2014.

The average landlord in England and Wales has seen total returns of £21,988 over the past 12 months, new statistics reveal.

Of this amount – and before any deductions such as property maintenance and mortgage payments were taken into consideration – the average capital gain contributed £13,594 while rental income made up £8,394 over the 12 months to January.

The buy to let index from Your Move and Reeds Rains, which takes account of rental income and capital growth, shows that returns have reached 12% in the 12 months to January.

This is up from 11.2% recorded in the 12 months to December and represents a 14-month high from the 12.3% in the year to November 2014.

Rental yields have proven resilient in the face of price rises as the gross yield on a typical rental property in England in Wales now stands at a steady 4.9% in January, the same as that recorded in December 2015.

On an annual basis, this is slightly lower than the 5% gross yield seen a year ago in January 2015.

Rent rises

Average rents across England and Wales accelerated into the New Year, rising 3.6% in January 2016, up from the 3.4% annual rent rises over the 12 months to December.

This puts average rents at £790 per month, as of January 2016.

But on a regional basis, annual rent rises are now led by the East Midlands and East of England, with rents up 5.9% and 5.8% respectively since January 2015. This pushes London to third place, with rents in the capital 5.7% higher on an annual basis, marginally slower than 6.3% in the capital in December.

At the other end of the spectrum rents are lower than a year ago in the South East and North East regions, both seeing a 1.0% annual fall. Meanwhile the slowest annual rent rises are in Wales, up just 0.6% since January 2015.

No bull in the buy to let china shop

Adrian Gill, director of estate agents Reeds Rains and Your Move, said: “Buy-to-let returns are building and property prices are picking up – as the housing shortage across the UK intensifies. Landlords’ balance sheets are looking healthier than at any point since 2014, and property investors are looking at an excellent rate of return from their portfolios.

“Stamp duty premiums on new buy-to-let purchases are the rhino in the room – everyone is talking about the 1st April deadline and the extra purchase costs are perceived by some commentators as potentially hazardous. But this is a little simplistic. Landlords are long-term investors and generally take good advice before making a new purchase, while the real changes will come when some landlords see gradual changes to their tax relief on mortgage interest. The rules around UK property are changing – but there is no bull in the buy-to-let china shop.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week