Rental rates have increased in London as the capital’s property market becomes more attractive to buy-to-let investors, a report has indicated.
The average monthly rent for a property in London is now £1,029, marking an increase of 0.4 per cent on last month’s figures and a 5.8 per cent rise on the reading from the same month of last year, according to LSL Property Services’ Buy to Let Index.
Investors will also be encouraged by rental yields of 5.1 per cent in the capital, up from 4.9 per cent this time last year. Rental yield is the amount of income an owner receives each year as a percentage of the property’s total value.
Rents went up in all regions of England and Wales for the first time in September, rising by 0.7 per cent to hit a record high of £718 per month, according to the report. The figure beats the previous record high of £713 measured in August. The average rent is now £29 per calendar month more than at the same point last year, leaving annual rent inflation at 4.3 per cent.
LSL Property Services estate agency managing director David Newnes said: “Rising rents may prove to be a headache for tenants, but they are improving the outlook for investors – which may in turn encourage further investment in the private rented sector. Despite capital losses after house prices fell annually, growing rental incomes means returns are still in the black.
“Yields have risen to their highest level since the housing downturn, outstripping many alternative investments. With house prices yet to resume their upwards climb, there are opportunities for prospective investors to secure profitable bargains.”
As well as London, rental rates hit record levels in Yorkshire and the Humber, the South East, the East Midlands, the East of England and Wales. Rents rose by 1.8 per cent in the South East and 1.1 per cent in the East Midlands compared to August’s figures.
Newnes continued: “It’s not just a regional phenomenon, localised to London and the South East – rents are rising across the board. In areas of the highest demand, such as the capital, competition is driving up rents at a faster rate elsewhere – but no region has been immune to the growing demand for rental homes from frustrated buyers.”
The report also found unpaid rent totalled £243m last month, lower than the £300m measured in August.