The UK buy to let sector is continuing to present itself as one of the best areas of investment, as a set of circumstances align perfectly to create a near-perfect environment for investment - of course with the proper research and due diligence.
According to the latest data from LSL Property Services (parent of Reeds Rains agency network and Your Move) UK rents are rising across the country, with record rental highs in London, the South-East, Yorkshire and the Humber, the East of England, Wales and the East Midlands. The firms latest buy to let index showed rents up 4.3% in September compared to the previous year. This, a growth of £29, also brought growth in average UK buy to let rental yields from 5.2% to 5.3%. The index hit the headlines because it showed rents rising in all areas of the UK for the first time.
According to massive agency network Countrywide, not only are rents rising, but rental properties are being viewed more often, more quickly and are letting in less time as a result.
In its report on the third quarter the firm said that rental properties now take an average of just 12.7 days to be let, with an average of 5 prospective tenants competing for each property. This shows demand up 10.8% compared to Q3 2010, and up by 11.9% compared to the previous quarter according to the report. Viewings are 17.8% higher than Q2 2011, and up 8.2% compared to last year.
The firm also reports an increase in demand from investors, with an increase in the first-time investor category. In Q3, 23.5% of all landlords were those investing in property for the first time, compared to 18.7% at the start of the year.
Margaret Longden, co-managing director at Countrywide Residential Lettings, said: "Since the beginning of the year we have seen a significant increase in tenant demand for private rental property, and although there are still some slight fluctuations that can be linked to seasonality, we’ve found that the demand for rental property has remained incredibly high throughout the year.
"We expect this demand to continue over the coming months, not only because many first-time buyers are struggling to save the substantial deposits currently required to purchase property, but also because a lot of people now see renting as a realistic alternative to home ownership, whether it be because they are awaiting further house price falls or because they are attracted to the flexibility that renting can offer."
Whether you buy into Britain having become a nation of renters or not, the facts remain: UK lending is in critical condition and most first time buyers either can't get credit or can't raise sufficient deposit, meanwhile thousands of previous owners were forced into renting by repossession, and this on top of the normal rental demand. This all points to strong rental demand for at least the next 3-5 years. During this time the building industry will still be trying to recover, and population growth won't wait for it. So, while UK buy to let has always been regarded a good investment, for the foreseeable future it is an excellent one.
- Thursday 10 November 2011