Buy-to-let yields strongest in North, Midlands and Wales

Analysis from the UK’s largest lettings agency Countrywide shows that the highest buy-to-let yields in July were achieved in Wales at 6.6%, Midlands at 6.5% and North at 6.4%.

The average yield across the UK was 6.1% for the month – no change from June.

Four plus bedroom properties saw the greatest increase in average monthly rents in July with a 3.8% month-on-month increase to £1,471pcm, despite falling 5.5% year-on-year.

Two-bedroom properties saw an increase of 1% to £787pcm, followed by three-bedroom properties up 0.9% to £898pcm and one-bedroom properties up 0.8% to £689.

All sized properties saw a year-on-year increase in average monthly rents apart from four plus bedroom properties.

Table A: Variations in rents, yields and arrears data in England, Scotland and Wales for property sizes

Bedrooms

July 2013 Average rent

June 2013 Average rent

Rent month-on-month increase

July 2012 Average rent

Yield %

Rent year-on-year increase / decrease

Arrears >30 days YTD 2013

1

£689

£684

0.8%

£658

6.8%

4.6%

6.3%

2

£787

£780

1.0%

£764

6.4%

3.0%

5.9%

3

£898

£890

0.9%

£872

6.1%

3.0%

7.0%

4+

£1,471

£1,417

3.8%

£1,556

5.4%

-5.5%

6.8%

Total

£866

£854

1.4%

£852

6.1%

1.6%

6.4%

Average monthly rent by region

The average monthly rent in the UK increased 1.4% in July to £866pcm, the highest level for more than two years.

East of England saw the greatest increase in average monthly rents up 5.2% month-on-month, followed by Wales up 5% and South East up 4.3%.

Despite some regional increases the average monthly rent fell in Central and Greater London and Scotland, with Central London seeing the greatest decrease down 2.8%.

Scotland has the lowest average monthly rent at £636pcm and Central London the highest at £2,414pcm.

Rent arrears fell year-on-year in all regions apart from Scotland and Central London. Average monthly rents are up 6.2% year-on-year in Scotland but arrears are also up 4.1%.

In Central London rent arrears increased 0.2%. The level of rent arrears fell for all sized properties, with three and four plus bedroom properties seeing the greatest decreases at 1.2% and 1% respectively but this would be fair as average monthly rents for these properties are higher.

Table B: Variations in rents, yields and arrears data in England, Scotland and Wales for regions

Region

July 2013 Average rent

June 2013 Average rent

Rent Month-on-Month increase / decrease

July 2012 Average rent

Yield %

Rent year-on-year increase / decrease

Arrears >30 days YTD 2013

Greater London

£1,113

£1,124

-1.0%

£1,084

6.2%

2.7%

6.9%

Central London

£2,414

£2,484

-2.8%

£2,632

4.8%

-8.3%

7.4%

East of England

£844

£802

5.2%

£835

6.2%

1.0%

6.8%

South East

£1,105

£1,060

4.3%

£1,118

5.9%

-1.1%

5.1%

South West

£772

£746

3.5%

£760

5.7%

1.6%

4.6%

Midlands

£659

£644

2.3%

£626

6.5%

5.3%

6.2%

North

£636

£635

0.3%

£613

6.4%

3.7%

6.9%

Scotland

£635

£636

-0.1%

£598

5.8%

6.2%

8.9%

Wales

£656

£625

5.0%

£624

6.6%

5.2%

6.3%

Total

£866

£854

1.4%

£852

6.1%

1.6%

6.4%

Nick Dunning, group commercial director at Countrywide, said the cost of renting continues to be higher in relation to the cost of monthly mortgage payments, with the average monthly rent now £866pcm.

“According to recent data from the Council of Mortgage Lenders, lending to buy-to-let landlords is now at its highest level for nearly five years,” he said.

“However, despite more competitive buy-to-let mortgages encouraging investors to expand their lettings portfolios and increase the supply of rental accommodation on the market, we have on average four to five tenants for every rental property we are marketing. Rental values are being underpinned by the increasing number of people living in the private rented sector and rents are likely to continue rising unless supply and demand becomes more aligned.”

Article courtesy of EveryInvestor

RentPro property management software for letting agents and landlords.

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