Landlords taking on new buy-to-let properties in London are charging twice as much rent as those in the rest of the country, according to data from one of Britain's biggest buy-to-let lenders. The average rent in the capital hit £1,417 a month in the second half of 2013, compared with £701 across the country, BM Solutions said. Its figures, based on the company's new lending to finance buy-to-let purchases, showed Londoners were being charged £135 a month, or 10.5%, more than the same period of the previous year, while across Britain rents were up by 4%, or £27 a month.
The lender, part of Lloyds Banking Group, said that rising house prices meant that although landlords had seen rental incomes increase, their yields from property had fallen. While in the second half of 2012 a new investor expected to make a 5.6% return on the purchase price of the property, that fell slightly to 5.5% in 2013. The level of deposit being used to buy varied hugely around the country, with landlords in London putting down an average of £119,750 – more than four times those in the north of England, who typically put down £27,710 in cash.
The number of buy-to-let purchases grew by 28% in the second half of 2013, to 46,4303, and were more than double the level recorded in the first six months of 2010. However, they remained below the peak of 96,640 in the second half of 2006.