The Buy to Let Industry is Booming in the UK
At the moment the buy to let industry is undergoing a massive boom in the UK, surging ahead of inflation and house price growth in order to hit an average of £977 per month. Eager first time buyers are struggling to climb to the first rung on the housing ladder with property prices rising. There is also tougher mortgage lending criteria and investors are continuing to enter the rental market.
Rising rents in the UK are a huge factor. Landlords are making nearly 4 billion pounds per month in total from their rental properties and the average monthly rent income has grown by 3.9% in the first quarter of the year. These days the average rent on a new tenancy in the UK was 11.8% higher in the three months leading up to July than the same period of time last year.
The average rent in London now stands at around £1,538 per month, which is almost twice the price of anywhere else in the UK. It is also 9.5% higher than it was a year ago.
If you look only at locations outside of Greater London, the average UK rent has fallen to £761 per month, according to an official report by the Homelet Rental Index. According to the report there has been an increase in average rental values in every region of the UK except the North-West over the year.
UK Regional Rent Increasing Faster Than London
There have been three regions in the UK that have seen rent rising faster than in London in the recent three month period. Those are the Southwest of England, Scotland and the Southeast of England. In the Southwest the rent prices rose 11.4%, while they rose 11.2% in Scotland and 10.3% in the Southeast.
According to Martin Totty, who is a chief executive of Barbon Insurance Group – HomeLet’s parent company, the index “demonstrates just how broad-based the rise in rent prices has become.” He insists that this is a trend that has persisted across the UK. Rising rents in London can be expected, as this region has always had a rental sector that continues to grow. However, these days rent is rising at similar rates in other areas of the country. Totty hypothesizes that areas such as the South-West are attracting more renters for lifestyle reasons, as well as the strong local economy in those cities and towns.
House and Rental Prices No Longer Similar
In the past the house purchase market and the rental market have been similar in recent years, but this is now changing. House price growth has slowed while rental values have continued to increase. This reflects that most people are more attracted to renting rather than buying in this recent period.
With so many changes happening at a swift pace in the buy to let industry in the UK, only time will tell what the future will bring.