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Should buy-to-let landlords worry about a 1pc rise in rents?


Should buy-to-let landlords worry about a 1pc rise in rents?

Official figures today showed rents rose by only 1pc in the past year

How landlords can avoid bad tenants
Landlords were able to get a 13pc return, on average, in the past year 

Interest in buy-to-let has exploded in recent years with rents and capital values rising in tandem to deliver healthy returns.

Figures published by the Office for National Statistics today showed only a modest increase nationally in rental prices, with London the highest at 1.5pc followed by Scotland at 1.4pc. For tenants, it represents a rise that is less than the cost of living, with Consumer Price Index inflation at 1.2pc in September.

Growth in rents has collapsed in Wales to just 0.2pc and the rise in England would have 0.8pc if London were stripped out of the figures.

The ONS figures are currently classed as "experimental" statistics which means that they form part of a new series of figures which is currently undergoing evaluation.

A separate rental index published by lettings network LSL Property Services, which owns chains Your Move and Reeds Rains, last week found that average rents across England and Wales rose to a new all-time high of £768 per month in September. But the September rise of 1.5pc represented a sharp slide from 2.4pc the month before.

LSL said landlords are now expecting slower growth in rents.

David Newnes, director of estate agents Reeds Rains and Your Move, said: "It is likely that rents in most parts of the UK will have now reached their seasonal peak – so as the market cools along with the autumn weather there may be opportunities for some tenants to pick up a favourable deal.

“Landlords predict slower rent rises to continue for at least a year. The latest LSL Landlord Survey shows expected rent rises of just 1.8pc over the next twelve months."

The study also found gross yields, income for landlords in England and Wales before costs and mortgage repayments are taken into account, stood at 5pc in September, the same as in August 2014, but representing a fall from 5.4pc in September 2013.

It also found that taking into account price growth and void periods between tenants (but before costs such as mortgage repayments or maintenance) total annual returns on an average rental property were 13.4pc over the twelve months to September.

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