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Buy-to-let investors earn near 10% a year

Buy-to-let investors in England and Wales enjoyed total returns of nearly 10% in the past year, new figures show.

Landlords saw gross rental yields rise to 5.2%, while rising property prices took their total average annual returns to 9.4%.

The latest Buy-to-Let Index from Your Move and Reeds Rains also showed that rents soared to an all-time record of £816 a month in September. That compares to £768 a month in September 2014.


Rents in London, the South-East, South-West, and East & West Midlands also hit regional records.

The average rent rose 6.3% over the past year, even though consumer price inflation (CPI) is now negative at 0.1%.

Rents in London are rising fastest, up 11.6% to a new record of £1,301 per month.

On a cumulative basis the difference with inflation is starker. Rents are now 24.4% higher than in January 2010, while the index of CPI inflation is just 14.1% higher.

This means rents have risen by 10.3% in real terms since the start of the decade.

Despite rising rents tenant finances have also improved, with rent arrears falling to 8.6% of all rent due.

Adrian Gill, director of estate agents Reeds Rains and Your Move, said: “Rents are rising strongly in real terms due to the recent acceleration in wages, and the much deeper and longer-term shortage of available properties across the UK.

“Meanwhile, as the price of everyday essentials plateaus and even falls, rents are no longer following the same broad trends. The cost of a place to live has now uncoupled from the cost of living.

“As long as this supply and demand imbalance keeps up, it is hard to see any reversal in the speed of rent rises.”

Gill said that reform of the UK housing market and planning system is the only serious way to maintain steadier rental inflation.

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    In Germany, the government fixes the rent. There is a fair way of doing this and it is linked back to the value of the property. 8% is a fair amount in my opinion. Covers the interest for a sensible morgage against the property, an acceptable profit and enough left to cover breakage or refurbishment. Good landlords with reinvest, increase the value and gain a better rent. Benefits both sides and is more equal

  • Kenny Sahota

    These rents in London are only likely to increase further, especially once the Night Tube has started (when it finally happens.) Great news for landlords, and those considering investing in the capital!

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    Steve Willett
    "fixing" anything is not how a free market works.The most inefficient fixing is done my governments

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    "Gill said that reform of the UK housing market and planning system is the only serious way to maintain steadier rental inflation."

    Not quite. There was once a time when there was much less of an imbalance between properties, people needing them and rents. Then again there have been other times when things were different and similar to what we have now. Currently al the talk is about properties and rent with nary a mention of people. People are the problem. There are too many of us and filling up our very small island with more people, for what ever wonderful liberal reason is the root cause of the mess we are in. We can add to this that relationships never happen so people live singly, old people need housing for an extra thirty years, immigration steams on without hindrance and you can probably add more reasons.


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