The levels of optimism seen in the UK buy-to-let sector in recent times is set to continue into 2014, according to the latest reports that have been released by LSL Property Services. It said that demand is now so high that as many as four in ten landlords across the nation are looking to increase what they charge their tenants in the coming year. It comes after a strong 2013, during which the average cost of renting a property rose to GBP 736, hitting new peaks and showing just how demand is continuing to push the buy-to-let sector forwards, even at a time when the number of people buying properties is on the rise.
LSL Property Services said the average that landlords are expecting to increase their charges by in the next 12 months is 3.7 per cent. However, while this shows that there remains a strong level of demand and improvement in the sector at the moment, it is also indicative of a maturing in the property market. The projected level of growth in rental prices over the next year is a full 0.9 per cent lower than what was predicted at this time last year.
It does, however, still remain solidly ahead of the reality, with current rental rate increases at 1.5 per cent across the nation. Of the landlords who are looking to increase what they are charging their tenants in the next year, though, 56 per cent said they were only doing so so they can stay in line with inflation, showing that there is a real feeling of making sure that tenants are not overcharged at a time when the market risks becoming unaffordable.
"Even with an increase in rental properties available, demand in the private rental sector continues to outstrip supply in many areas, especially in London," said David Newnes, director of LSL Property Services. "In the months ahead, this will enable landlords to push up their rental prices when letting their properties, putting a stop to inflation from eating into their rental income. This is underlined by the fact that covering the cost of inflation is the main reason cited by landlords expecting to increase rents."
House prices are up, rents are going up - when, where why and how did the housing market go wrong? - We attempt to throw some light on the subject here: The House Price Paradox - Who's Fault is it Anyway?
- Monday 10 February 2014