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London landlords urged to buy as rents reach all-time high

A property expert has advised investors to start buying property to let as average rents in London reached an all time high and the number of available homes continued to fall.

Rightmove found that average asking rents in London rose to £2,091 a month in the first quarter of the year, with further growth predicted this year.

After a few years of slowing and dropping rents in the capital, asking rents in London are now up 8.2 per cent on Q1 last year.

Average rents increased as available rental stock in the capital dropped 33 per cent in just two years, the figures from the property website show.

Housing supply in the PRS outside London is down 13 per cent over the corresponding period.

Rightmove’s commercial director and housing market analyst, Miles Shipside, said: “What we really need now is more fresh stock for the rental market so that rents don’t continue to rise at the current rate we’re seeing, so perhaps it’s a good time for some investors to consider buying up properties to let out as the tenant demand is definitely there.

“There was a temporary slowing and drop in rents in London when the second home stamp duty tax came in back in 2016 as so many investors bought properties before this came in, leading to a huge increase in rental choice.

“But the lack of new stock since that time has led to rents increasing again, and London renters are now faced with rents that are over 8 per cent higher than this time last year.

“Outside London, the pattern is not as extreme, but there is still a significant drop in fresh choice.”

Outside London, the North East is the only region to have seen a drop in rents over the past 12 months, down 0.3 per cent.

Away from the capital, Scotland has witnessed the biggest rise in asking rents, which are up 6.7 per cent year-on-year.

But it is the South East which has the highest average asking rents outside of London, with the average rental home being £1,054 per month.

Mr Shipside added: “Suffice to say the government’s introduction of higher stamp duty on second homes purchases back in 2016 combined with other tax increases has resulted in an ongoing trend of decreasing activity from investors in the buy-to-let market.

“Consequently, we’re seeing the initial price drops being replaced by rapid price growth in some areas.”

The ban on tenant fees comes into force in England on June 1 this year, with the Tenant Fees Act 2019 summarising the government’s mandate on banning letting fees paid by tenants in the private rental sector and capping tenancy deposits.

Based on a five-week deposit cap, Rightmove has calculated that the cheapest deposits outside of London will be in the North East, at £630 per property on average. The most expensive will be in London at £2,415 per property. In London the cheapest deposit will be in Rainham (£1,216), with the most expensive in Kensington (£4,065).

Mr Shipside said: “The upcoming tenant fee ban should spell some good news for tenants and it may lead to more people being able to move more often if they want to, thanks to the reduction in the cost of moving.

“It remains to be seen if the ban will be passed on in other ways such as increasing rents and tenants will still need to find a pretty hefty rental deposit in many areas.”

Source: Simple Landlords Insurance

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London landlords look north to beat stamp duty

Growing numbers of landlords who live in London are looking beyond the capital for buy-to-let returns.

Analysis by Hamptons International – based on activity at Countrywide branches – found that 59 per cent of London-based landlords purchased their buy-to-let property outside the capital during the past 12 months.

In contrast, in 2010 just one in four London-based landlords purchased their buy-to-let outside the capital, with 75 per cent investing in London.

However high house prices in London mean that the 3 per cent Stamp Duty surcharge is particularly significant in the capital, and are pushing buy-to-let investors further out.

The proportion of London-based investors purchasing buy-to-lets in their home region has fallen 17 per cent since 2015, the agent said.

The capital is still the most common area, favoured by 41 per cent of London landlords, but 34 per cent now invest in the north and the midlands, which is up 19 per cent on 2015.

Meanwhile, the analysis found the average cost of a new let in Great Britain rose 1.9 per cent annually to £969 per month in March.

This was driven by a 3.7 per cent rise in Greater London to £1,737 per month, the highest level on record.

Scotland was the only region where rents fell, down 0.1 per cent year-on-year.

Aneisha Beveridge, head of research at Hamptons International, said: “April marks the three-year anniversary of the Stamp Duty surcharge introduction for second-home owners.

“Following the tax hike, landlords have been adapting their strategy to find new ways to make their returns. Lower entry costs and higher yields outside of the capital are enticing investors to look further afield than they have previously.”

Source: Simple Landlords Insurance

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Stamp Duty hikes pushing more London landlords out of their home city

Increasing numbers of landlords who live in London are looking beyond the capital for buy-to-let returns.

Analysis by Hamptons International – based on activity at Countrywide branches – found that 59% of London-based landlords purchased their buy-to-let property outside the capital during the past 12 months.

In contrast, in 2010 just one in four London-based landlords purchased their buy-to-let outside the capital, with 75% investing in London.

However high house prices in London mean that the 3% Stamp Duty surcharge is particularly significant in the capital, and are pushing buy-to-let investors further out.

The proportion of London-based investors purchasing buy-to-lets in their home region has fallen 17% since 2015, the agent said.

The capital is still the most common area, favoured by 41% of London landlords, but 34% now invest in the north and the midlands, which is up 19% on 2015.

Meanwhile, the analysis found the average cost of a new let in Great Britain rose 1.9% annually to £969 per month in March.

This was driven by a 3.7% rise in Greater London to £1,737 per month, the highest level on record.

Scotland was the only region where rents fell, down 0.1% year-on-year.

Aneisha Beveridge, head of research at Hamptons International, said: “April marks the three-year anniversary of the Stamp Duty surcharge introduction for second-home owners.

“Following the tax hike, landlords have been adapting their strategy to find new ways to make their returns. Lower entry costs and higher yields outside of the capital are enticing investors to look further afield than they have previously.”

Region

Where London-based landlords purchase buy to lets

Change since 2010

Change since 2015

London

41%

-34%

-17%

South East

11%

5%

-2%

East Midlands

10%

8%

6%

East

10%

-1%

-2%

North West

9%

9%

1%

Yorkshire and the Humber

6%

6%

6%

West Midlands

6%

5%

2%

South West

3%

-1%

1%

North East

2%

2%

1%

Scotland

1%

1%

1%

Wales

<1%

0%

0%

 

 

 

 

North and Midlands

34%

30%

19%

By MARC SHOFFMAN

Source: Property Industry Eye