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Strong Start for UK Rental Market

The UK rental market is enjoying a strong start to 2017, despite the looming tax changes for landlords.

The private rented sector has been subject to a string of new policy announcements over the last year from a stamp duty surcharge on buy-to-let purchases and a ban on letting agent fees for tenants to the phasing out of mortgage interest tax relief from this April, forcing smaller investors up a tax bracket. As a result, many will have no option but to raise their rents. Many have already begun, according to some research.

While investors may be cautiously considering how to approach the buy-to-let market in the UK, though, or incorporating to avoid the new tax rules, new research highlights the strong performance of the rental market at the start of 2017, with the average rent in England and Wales rising in all but one region.

Rents have risen 1 per cent in the last 12 months to an average of £798 per month.

The region with fastest rising rents over the year was East of England, while London properties continue to attract highest rents. The East of England saw rents increase 6.9 per cent in the year to January 2017. Prices in this area may have been buoyed by people living in London looking beyond the capital city in order to meet their housing aspirations.

Other areas to see strong growth included Wales – where prices increased by 6.5 per cent, in the past 12 months to reach £586 – and the East Midlands, which saw a 4.5 per cent uplift compared to a year ago. The average property in this region – which includes major cities such as Derby, Leicester and Nottingham – now lets for £634 per calendar month.

House prices, though, are also climbing. While this means capital growth will add to the total returns from a property in the long-term, short-term yields are being squeezed.

Across England and Wales the typical property returned 4.6 per cent during January, slightly down on the 4.7 per cent recorded during the previous month. This figure is also below the 5.1 per cent yield seen in January 2016.

Nonetheless, yields continue to vary from region to region, with areas boasting the lower initial purchase costs generating the largest percentage return: the North East, for example, continues to lead the way in this respect with the average property generating a 5.3 per cent yield – the same as last month.

Indeed, houses in the North West typically gave landlords a 5 per cent return on investment and those in Wales were also above the national average, recording 4.7 per cent during the month. Yields in the Yorkshire and The Humber area were exactly in line with the national average at 4.6 per cent.

London continues to have the smallest yields as properties in the capital returned 3.2 per cent to investors in January. This is a fraction down on the 3.3 per cent seen in December and reflects the continued high cost of housing stock in the Greater London area.

With demand for rental accommodation up 10 per cent year-on-year, according to some sources, landlords will need to pick their property location carefully to succeed in 2017.



Projects from this area

Jameson House, Sunderland, UK

Jameson House is an exceptional opportunity to invest in an excellent development at the heart of the growing maritime city of Sunderland;

The development is ideally located for both students and young professionals in the city.

Sunderland is a thriving city with a lot of opportunities for its residents with 80 international companies, such as Nike and Nissan, having relocated to the city, catering to over 25,000 employees;

Sunderland city council is investing money in the city centre to breathe new life into the city. Redevelopment projects comprise a new 1.8million public square which was completed in 2015;

Jameson House, Sunderland provides purchasers with a 9% NET rental return (excluding ground rent), complete with a 3 year rental assurance*;

Each studio apartment comes with a furniture pack, offering a carefully selected range of contemporary designs, chosen specifically to complement the apartments within Jameson House.


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Crane Court, Huddersfield

Crane Court is a new purpose built student accommodation development, bringing 252

luxury studio apartments to the heavily undersupplied student accommodation market

in Huddersfield;

Crane Court provides purchasers with a 9% NET rental return, complete with a 5 year rental assurance*;

Their management service is designed to offer you peace of mind, making sure that all stages of the tenancy process are taken care of.

All of their staff hold National Federation of Property Professionals (NFOPP) qualifications and they are members of the Property Ombudsman.

Rent on Time’s Rental Insurance, underwritten by Europe’s second largest insurer, provides you with a safety net when it comes to recovering rent.

They work hard to make sure that your unit is occupied at all times, with properties advertised on the UK’s largest property websites including Rightmove, Zoopla and PrimeLocation.


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Click here to see all the projects from this area.