Buy-to-letAug 31 2017

Tenants suffer as rents climb amid landlord selloffs

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Tenants suffer as rents climb amid landlord selloffs

Rents edged up in July due to a drop in the available housing stock as under-pressure landlords sold off their properties.

The average rent in England and Wales rose by 0.22 per cent during the month to reach £874, according to Your Move’s latest Buy-to-Let Index, which is based on an analysis of approximately 20,000 properties.

In the past year, average rents across the two countries have grown by 3.1 per cent, with nine of the ten regions seeing increases.

The strongest performance was in Wales, where rents have risen by 4.3 per cent in the last 12 months to hit an average of £595.

Three other regions – the South East, East of England and the North West – saw increases of 3 per cent or more.

But there was evidence that the increases are having an impact on tenant finances, with the proportion in arrears standing at 13.7 per cent in July – up from 7 per cent the previous month.

Your Move director Richard Waind said: “We are now starting to see the real impact of the government’s stamp duty revision, plus the additional tax changes which have hit landlords hard.

“The outcome has been a decline in the number of rental properties on the market and this has had the effect of pushing up prices for tenants.”

Your Move said that an exit of EU citizens following the Brexit vote may have reached its lowest ebb, and an anticipated rise in tenant numbers could lead to further rent hikes.

While rents increased between June and July, yields remained flat for most landlords.

On a yearly basis, however, each of the regions surveyed recorded lower yields than 12 months ago, with the England and Wales average down from 4.9 per cent to 4.4 per cent.

Landlords in the north continued to see the highest return on their investment, with the North West and the North East the only regions where average yields were 5 per cent or higher.

Your Move’s data corroborates recent research from Foundation Home Loans showing landlords with larger portfolios have been selling off properties.

Christine Newell, partner at Solihull-based mortgage club Paradigm Mortgage Services, said they had recently witnessed a drop in buy-to-let applications.

She added: “I think the changes are going to take quite a while to bed in. Landlords are only just starting to see the first hits of the tax changes on rentals. They won’t see the impact until they start doing their tax returns at the end of the year.