Investors look to capitalise on increased rents - Emerging Real Estate

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 Investors look to capitalise on increased rental income

The UK’s buy to let market has seen a significant boost this past quarter as gross rental yields for landlords averaged 4.75%, beating equities and cash for growth.

In June the average monthly rent was £876, making this the highest average price on record as rents rose 2% in just three months, according to the latest rental index from FindaProperty.com.

The high rental yields compare well to cash saving accounts which are currently returning an average of around 0.89%, with average cash ISAs returning 2.54%, the index says. Equities have fared even less well in the past quarter, with the FTSE falling 1.07% in the second quarter of 2011.

Also revealed in the Rental Index was a sharp rise in the number of homes being offered for rent – showing an incredible 9.7% jump in the number of properties on the market as landlords look to capitalise on the record returns.

The most expensive area to rent remains London with average rents of around £1,979 a month while it is cheapest to rent in the North East, where the average rent is £582 a month.

The West Midlands was the only region to show a dip in rental prices, down 0.3% on the quarter, with all other areas showing rent rises compared to the first three months of the year. Ironically, the East Midlands showed the largest average rent rises, with the price increasing by 3.5% on the quarter.

‘Our data shows that buy to let property investments are now better than most cash savings accounts and equities and we are certainly hearing about great results from certain buy to let landlords. Demand for rented property is soaring across the UK as people find they can’t afford to buy,’ said Samantha Baden, property analyst at FindaProperty.

‘The average rent of £876 is the highest on record and we are now seeing more rental properties coming onto the market as landlords look to take advantage of the increasing returns. In time this may start to bring rental prices under control but we expect to see rental prices continuing to rise for the foreseeable future,’ she added.