Stable Rents 2006-07-05Posted by clype in Money, Statistics.
Average rents achieved on residential investment properties remained steady in 2006-05, rising 0.8 per cent, according to ‘Paragon Mortgages’.
Today’s buy-to-let index shows the typical landlord earning a gross rental income on each property of 10 189 GBP, or just over 849 GBP/month. This compares with 10 113 GBP for 2006-04 and 10 082 GBP for 2006-03.
At the same time, investment property prices continued to edge up, rising by 2.9 per cent over the month, from 164 247 GBP in 2006-04 to 168 935 GBP in 2006-05. The price at which landlords purchased properties has risen by 7.7 per cent over the past twelve months, reflecting the relative buoyancy of the residential property market in late 2005 and early 2006. Paragon Mortgages’ Managing Director Mr.John Heron, said:
‘With rents stable, tenant demand healthy and market confidence solid, landlords continue to purchase new properties in a generally upward moving property market. Investor activity has been increasingly strong over the past nine months.’
Average rental yields stand at 6.0 per cent, although there continue to be variations between regions.
Regionally, yields tend to be higher in parts of the country where property prices are lower, while Greater London and the South East, where prices average 327 139 GBP and 184 087 GBP respectively, consistently have lower yields (5.7 per cent and 5.8 per cent).
For the second consecutive month, the East Midlands and the North West head the table as the highest yielding regions, at 6.6 per cent and 6.6 per cent. Prices in these regions are respectively 19.2 per cent and 25.1 per cent below the national average.
While Greater London has the lowest rental yield, the total return for the capital (based on property value appreciation and rental income) is strong. London has again this month generated the highest total return, of 36.3 per cent, on a typical property purchased 12 months ago. Greater London was followed by the North at 34.7 per cent and East Anglia at 28.4 per cent. Paragon Mortgages’ Managing Director added:
‘There is a long term structural shortage of good quality residential property in the UK, and demand for it is growing steadily. In addition to the demographic growth in the number of households, there is a steady influx of migrant workers, who tend to choose rented properties for their accommodation needs. Over the next five to ten years, the private rented sector is expected to grow steadily on the back of a stable economic environment.’
‘Rents stay stable‘, Laurie Osborne, Editor In2perspective, 5th Jul 2006, (a Wednesday) at 01:00PM