Rent rises push the north / south divide

Rent rises push the north / south divide



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Latest figures released by a leading estate agency group show the buy-to-let sector is making a substantial recovery – particularly in the South.  

Whilst rents rose by an average of 0.3% in February, pushing the average UK rent up to £658 – 3.2% higher than a year ago – landlords in the South have seen considerably larger buy-to-let returns than those in the North.

 

According to the latest Buy-to-let Index from LSL Property Services, those renting in the South have enjoyed returns as high as 16.1% in London, compared with just 1.2% in the North East.

 

Overall, the total return in investing in buy-to-let has hit 10.6%, the highest in at least two years, with experts expecting the buy-to-let sector to return 8.5% over the next 12 months; equivalent to £14,000 on a typical property.

 

David Brown, commercial director of LSL, commented: “The short term glut of supply in the rental market at the end of 2009 and the beginning of this year as landlords rushed to grab the stamp tax break has now disappeared. This means rents are on the rise again. 

 

“The good news for landlords is that those who missed out on the stamp duty holiday to grow their portfolios are now able to pick a new property slightly more cheaply anyway as the housing market pauses for breath, and are able to charge better rents as the competition for tenants subsides.”

 

However, despite the rise in rents, the northern regions and the midlands don’t seem to be enjoying the same stellar returns as those in the South. According to Mr Brown, this isn’t about rent increases: “The widening gulf in buy-to-let returns has been driven more by increasing property values than rapid rent increases.

 

“The picture on rents has been much more mixed with no particular regional pattern emerging. We would expect returns to improve in the north as the recovery in south spreads out, but it may lag behind for a few months yet.”

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