‘Difficult Conditions’ in London Buy to Let Market, Rising Yields Nationwide

The London buy to let market is suffering from ‘difficult conditions’. However, nationwide, rents have risen 2.4 per cent year on year suggesting an overall uptick in the private rental sector.

The latest Buy to Let Index from Your Move revealed the ‘difficult conditions’ in the London market, with rents falling by 1 per cent over the last year. The average rent in the capital stood at £1,276 in October. This marks out London as one of just two regions to see decline in October, along with the North East. In the latter region, rental accommodation is the cheapest nationally. The North East also saw rents decline by 1 per cent year on year, however they amounted to an average rental price of merely £535 in October.

In contrast, the East of England saw the strongest rental growth, up 6 per cent over the last year to fuel a monthly rent of £887 in October this year. This falls above the national average of £845. Your Move has suggested that this growth was driven by growing rental prices outside of London and the home counties.

Investment property yields were also seen to stabilise in October, following a difficult year for landlords. The average yield in each region remained steady between September and October. The average yield across England and Wales therefore remains at 4.4 per cent for the second month.

However, landlords are receiving a smaller return across every region than last year, although there was nationwide variation within this. Rental properties in northern regions offered investors higher yields than other areas, with research demonstrating that the North East offered yields of 5.1 per cent and the North West had yields of 5 per cent. In contrast, the South East offered yields of a mere 3.3 per cent, whilst London offered a meagre 3.2 per cent yield for buy to let property investors.

 

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