Results from the latest Quarterly Lettings Index survey by Countrywide have revealed a highly favourable rental market for UK buy-to-let landlords in the private rented sector.
The Countrywide quarterly lettings index analyses all UK PRS rental prices, rent arrears and gross rental yields and is the UK’s largest national lettings index based on over 50,000 rental properties across England, Scotland and Wales.
The latest survey has uncovered a number of interesting statistics
- Average monthly rents in Inner London are the highest in the UK and four times more than in Scotland
- Scotland has the cheapest rental accommodation in the UK and is the only region where arrears have increased
- Average monthly rents increased the most in Wales and the East of England at 5.5%, followed by Outer London at 5.4%
- Average UK rental yields of 6.2%, with Wales topping list at 6.7%
- Rising rents, falling arrears and fast letting times provide the perfect recipe for buy-to-let investors
- Average rents have risen and rental payment arrears have fallen in Q1 2013 compared to the prior year.
All parts of the UK, except Scotland and the South East, experienced a rental price increase from the first quarter of 2012, with average monthly rents increasing the most in Wales and the East of England up 5.5% to £618 (GBP) and £814 (GBP) per month respectively in the first quarter of 2013.
- Outer London’s average monthly rents rose by 5.4% year-on-year to £1,107 (GBP) per month.
- The South East experienced a decline in rental asking prices with average rents falling by 1.1% from the previous year to average just £1,054 (GBP) per month.
- In Scotland average rents fell 2.6% to £580 (GBP) per month, making it the cheapest rental accommodation in the UK.
The Countrywide Quarterly Lettings Index also shows that in the Midlands, average rents recieved by buy-to-let landlords also increased by 1.8% to £636 (GBP) per month.
The highest priced average PRS rents were in inner London at £2,387 (GBP) per month in the first quarter of 2013, up 1.9% from the final quarter of 2012 and 1.9% from2011.
The North and South West also experienced a year-on-year average rent rise, with rental prices increasing to £603 (GBP) per month and £745 (GBP) per month, up 2.7% and 2.3% respectively, but down 1.9% and 0.2% respectively from the final quarter of 2012.
The buy-to-let rental market in Scotland also revealed an anomaly in rent arrears. It was the only region in the UK to witness an increase in arrears outstanding more than 30 days in the first quarter of 2013, up 2.6% from the prior year to 6.6% of the total rent roll.
All other parts of the UK experienced a drop in buy-to-let rent arrears outstanding more than 30 days in the first quarter of 2013, with the South West having the lowest rent arrears at only 4.5% of the total rent roll, an improvement of 1.2% year-on-year and 0.3% from the previous quarter.
Inner London had the highest rental arrears at 7.3% of all UK PRS rents due in the quarter, a fall of 0.1% from the previous year.
The drop in rental arrears has been attributed to many UK PRS buy-to-let landlords taking advantage of specialist products and services designed to help landlords, including Rent Guarantee Insurance and comprehensive Tenant Referencing.
Commenting on the Index, Nick Dunning, Group Commercial Director at Countrywide plc, said:“The Countrywide Quarterly Lettings Index has once again given us the most comprehensive insight into the rental market across the UK and has highlighted some revealing facts. It shows that the rental market continues to develop strongly with some interesting movement in market dynamics from London to the regions. The growing average monthly rents across the UK shows the increasing attractiveness of regions outside London. London remains a good place to buy property, but investors are venturing further afield for investment opportunities. Scotland is an anomaly to this – with falling rents and increased arrears being compounded by recent legislative changes, investors might be deterred from buy-to-let investment.”
Legal 4 Landlords spokesman, Sim Sekhon commented, “The development of rent guarantee insurance now provides UK landlords with a little peace of mind and a guaranteed rental income should anything happen to affect the tenants financial circumstances or employment status. Tenant referencing can help landlords determine the best tenants for their rental properties and avoid bad tenants. These products are being refined all the time and can really make a difference to landlords who need to keep their rental income flowing.”