Rents in UK edging upward in first quarter of 2016
Image Rents in the UK, excluding London, increased by 0.8% in the first quarter of 2016 and are 3.9% higher than the first quarter of 2015, the latest index data shows.
In Greater London they increased by 1.3% quarter on quarter and are 1.6% higher than a year ago, according to the figures from Rightmove.
This takes the average rent in Greater London to £2,021 and in the rest of the UK to £761. The figures also show that rents have seen growth in 2016 compared to a quarterly decline of 1% in London and 0.8% elsewhere in the fourth quarter of 2015.
After Greater London the North West was the strongest performing region in the first three months of the year with a rise of 1.1% with the South East and the East of England both falling by 0.1%, though the East of England’s annual increase of 5.9% still sees it outstrip all other regions.
The top five growth areas outside of Greater London year on year were Harpenden, Luton, Rushden, Corby and Salford with rents up 14.3%, 12.8%, 12.7% 12.6% and 11.7% respectively, taking averages to £1,217, £828, £619, £585 and £797.
The Rightmove data also shows that interest in buy to let properties fell in March, with new purchases from buy to let investors down 27% compared to the same month last year. This reversed the upward trend between December and February which saw a 24% year on year increase in buy to let enquiries.
According to propertywire, “This was probably due to the looming April change in stamp duty which saw a new 3% rate levied on buy to let properties and second homes.”
‘This waning of interest definitely seems to predict a slowdown in the buy to let market, but what’s not yet clear is if this will only turn out to be a short term pause. It could be that some investors are waiting until the tax changes have some time to bed in before they review their business and continue to make purchases,’ said Sam Mitchell, Rightmove’s head of lettings.
‘If this removes some of the competition for smaller properties then it could spell good news for many first time buyers with a deposit ready as they may find now is the ideal time to make a move,’ he added.
The report suggests that buy to let investors not deterred by the tax changes and looking for the best yields could consider buying in areas in the north such as Durham and Merseyside. The top four locations for best yields are all in these counties, with Peterlee in Durham highest at 9.1%, followed by Bootle in Merseyside at 8.6%. In third place is the neighbouring town of Birkenhead offering a yield of 7.8% and fourth is Stanley in Durham at 7.7%.
‘These areas where you can buy a two bed property for around £60,000 to £70,000 seem to offer a sound investment as long as the demand is there from tenants, so it’s worth speaking to local agents about what the rental market is like,’ Mitchell explained.
‘Whilst the highest demand for rental properties is often in the South and the East of England, this quarter’s data shows demand is growing in Manchester in places like Ashton-Under-Lyne and Stalybridge so they’re worth considering this year as well,’ he added.