Property prices shift to more sustainable growth

This November saw an improvement in total returns for landlords in both England and Wales, representing a positive shift towards sustainable growth.

Taking into account growth in prices and void periods between tenants (before expenses including mortgage repayments and maintenance) annual returns on the average property are up by 12.8 per cent since last November.

The average landlord in England and Wales receives an annual return of £21,512 before deductions with rental income accounting for £8,305 and average capital making up £13,207.

David Newnes, director of Reeds Rains and Your Move, said that property prices have now shifted to a more sustainable pattern and that this can only be a good thing for landlords.

"Rental income is also steady,” he added, “with average gross yields hovering just above their long-term 5% average for over a year now.”

He believes that this makes buy to let something of a “haven” from the insecurity seen in other investments – although careful attention to detail, local knowledge and financial understanding are always vital ingredients needed to realise the best possible return on any investment.

Improving employment prospects could tackle rental arrears

As of November 2014, 7.5 per cent of all rent was in arrears compared to 6.9 per cent in October and 6.6 per cent last November.

Despite the slight deterioration seen in November, rent arrears are still considerably lower than in previous years when they peaked at 14.6 per cent in February 2010.

In absolute terms, there was £266 million in outstanding late rent during November which was up from £244 million in October and £228 million in November 2013.

Newnes commented on these statistics by saying British households have finally seen wage growth increase over inflation for two months in a row.

They now have more to spend than they did a year ago – and those few extra pounds are always important.

He said:

"Tumbling unemployment is now complemented by this well-awaited growth in the amount people can earn once they do find a job. And looking back, an improving employment picture has already had an enormous impact on the long-term trend for tenant arrears.”

On the whole, 2014 has been very positive for the affordability of renting.

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