November 16, 2022
Rents on the rise – why landlords shouldn’t be considering selling in 2023
Here at Atkinson McLeod, we are experiencing huge increase in rents at the moment. This comes despite the external economic and political difficulties the country is facing.
It’s still a great time to be a landlord, despite recent head-winds – whether it be landlord licensing, increased taxes or more regulation. That’s because rental demand is holding up in a big way while stock remains in short supply, giving you a great chance of generating strong rental income. And, in turn, better rental yields.
Here, we set out why rents are rising. Why landlords should remain in the sector. And why it would be wrong-headed to sell up now.
1/ Huge levels of demand
The capital is witnessing unprecedented levels of demand for rental properties. Which is helping to keep rental prices high.
According to data from Savills, between January 1 and the end of September this year, rents rose by 13.7% across prime London districts. This was the steepest growth since the property consultancy’s records started in 1979.
The findings show that, since the end of June alone, rental prices have risen by 3.3% on average. That is an equivalent to an extra £74.48 on a £2,257 monthly rent. What’s more, a 13.7% yearly rise represents an additional £309.21 per month – or £3,710.51 per year – on the same rent.
Rents have been rising at their fastest in north-west, north and east London. There has been a huge increase in demand for homes in the capital from students and young professionals as part of the post-pandemic bounce-back.
For a while, with no theatres, restaurants, bars, gyms, cinemas, clubs or museums open to the public during Covid, there was far less reason for people to live in London. People moved out of the capital as the race for space commenced.
However, as soon as things opened up fully again, this trend started to reverse. The lure of the city – and all that it offers – took over once more.
2/ Rightmove records record highs
In a further sign of the rude health of the London rental market at present, the latest data from Rightmove’s Rental Price Tracker – which records asking prices for new listings – showed that the average rent for a home in the capital now stands at £2,342 per month, a record high for any UK city.
There has been an increase of 3.8% in the last three months alone and rents are now 16.1% higher than a year ago.
Meanwhile, according to the latest government statistics – which cover existing tenancies as well as new listings – London rents rose at their highest rate in five years in the year to July, up by 2.1%.
Again, the lack of supply and high demand is helping to drive these price rises.
3/ Now is a great time to be a landlord
If you are a landlord who is considering selling up and quitting the buy-to-let sector, the above may make you want to think again. While there has been an increase in taxes, regulation and legislation, buy-to-let still represents an excellent investment opportunity. Something that is perhaps more important than ever at the moment.
Although there has been uncertainty recently, the lettings market has remained resilient. Fuelled by unprecedented demand and a shortage of stock. This has kept prices high and increased the chances of strong rental yields.
There is no suggestion of demand falling away anytime soon – especially as higher mortgage rates potentially deter prospective first-time buyers, keeping them in the rental market. And, while the fundamentals of the market remain the same, landlords can expect to achieve a good ROI.
If you have any questions about letting a home in the London area, Atkinson McLeod is here to help.
To find out more about our services and current operations, please get in touch with our expert team today. You can find out how much you could be charging in rent each month on the current market by requesting a free and instant online valuation here.