Landlords make record returns as both house prices and rents increase
According the monthly buy-to-let index by the Your Move and Reeds Rains estate agents the average return for a Landlords property investment in January was 12% when including both rental income and property price increases.
This is best increase since 2014.
“Buy-to-let returns are building and property prices are picking up – as the housing shortage across the UK intensifies,” said Adrian Gill, director of Your Move and Reeds Rains. “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. With house prices rising rapidly into the New Year, this acceleration will be a welcome addition to the wealth of landlords on paper, while solid rental yields are underpinning total returns pushing well into the double digits.”
The rent increase for January averaged 3.6% rising to £760 with London rising 5.9% to £1241. House prices on average rose 6.7% year on year.
Although Landlords experienced large increases in income the future looks less uncertain. With changes in tax and landlords unable to offset mortgage interest costs in the future and a rise in stamp duty of 3% from April many landlords are either pulling of the market or stopping investing.
The Residential Lettings Association (RLA) found 10% of its members surveyed were planning to pull out of the buy to let market and that 33% will stop investing. However 46% are trying to complete an investment before the April 3% stamp duty deadline.
“Stamp duty premiums on new buy-to-let purchases are the rhino in the room – everyone is talking about the 1 April deadline and the extra purchase costs are perceived by some commentators as potentially hazardous,” Gill said. “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.”