House Prices Help Boost Rental Income
From Press and Journal
March 18, 2008
BUY-TO-LET investors made average returns of more than 16% last year on the back of rising property prices and increasing rents, according to recent figures.
The average landlord made returns of 16.3% on their property during the year, excluding the cost of fees and mortgage interest, up from returns of 13.5% in 2006, according to Birmingham Midshires.
The rise was partly driven by a 10.7% jump in house prices during the year, leaving the average investment property costing £154,795.
But the group said most of the gains were seen during the first half of 2007, with the market much more subdued during the final six months of the year as a result of five interest rate rises seen during the previous 12 months.
Property value rose by just 1.6% during the final three months of the year, and the slowdown is expected to continue into 2008, meaning total returns for investment landlords are not expected to be as strong this year as in the recent past. Rent also rose during 2007, increasing by just over 13% to average £698 a month.
People looking to rent a home in Scotland saw the biggest rise in cost during the year, with rents there soaring by nearly 23%, while there were also strong rises in the north of England at 18.2% and in Greater London at 15.4%.
The East Midlands also recorded the lowest rental growth, with average rents risingby only 8.9% last year. Despite this, the north of England is still the cheapest place to rent a property at an average of just £494 a month.
