Most landlords are no better off now, even after substantial rent increases over recent years. 

Rightmove recently reported that national average asking rents outside London hit a new record of £1,190 per calendar month in the first quarter of 2023, after increases for 13 consecutive quarters. Average asking rents in London have exceeded £2,500.

But Jonathan Rolande of the National Association of Property Buyers says landlords are “far from jubilant” about the rises.

He claims: “A shortage of available stock, all part of the current housing crisis, increased demand and wage growth have all combined to allow landlords to push up rents with tenants having little choice but to pay them.

“But Landlords are unlikely to feel jubilant. Anyone with a mortgage, which is around 60 per cent of the 3m private landlords, will have seen the interest rate they pay rise dramatically and will not feel better off despite the rent increases. What’s more, as sale values are falling, so the rent being collected is a higher percentage of the new, lower price making yields look better despite erosion of the capital value.

“With the declining sales market, capital growth is off the table – at least for now. This will bring into sharp focus whether Buy-to-Let is a good place to invest.”

Meanwhile separate data from Rightmove reveals that new first-time buyers are now paying £200 more per year on their mortgage than last year due to a new record average asking price and higher mortgage rates.

First-time buyers with a 15 per cent deposit are now paying £1,056 per month compared with £865 last year. The analysis is based on the average asking price for a typical first-time buyer type property (two bedrooms and fewer) and the average rate for a five-year fixed 85 per cent Loan-To-Value mortgage spread over 25 years.

Meanwhile, the average asking price for a first-time buyer type property is now a new record of £224,963.

However, Rightmove says the signs are that determined first-time buyers are still doing all they can to get onto the ladder despite economic challenges. Buyer demand in the first-time buyer sector is currently 11 per cenrt higher than the last more normal market of 2019 and is holding up most strongly against pre-pandemic levels.

Average mortgage rates becoming more stable, and a frenetic rental market are key drivers for this determination from first-time buyers. The average asking rent for a first-time buyer type property is now £1,120 per calendar month and has increased 11 per cent compared with last year.

The portal’s mortgage expert, Matt Smith, says: “The combination of a new record price and higher mortgage rates than last year means it is challenge for first-time buyers. Our data indicates that first-time buyers who are able to raise their deposit are still finding buying compelling, with the number of people looking to move in this sector currently higher than the last more normal market of 2019. 

“It was understandable that some buyers took a step back in the immediate aftermath of the mini-budget, particularly first-time buyers, as mortgage rates rapidly rose. Those looking to buy now may find that the average monthly mortgage payment on the home they are looking to buy is significantly less than they may have paid at the peak of rates in October. 

“Now that rates are settling, would-be buyers planning a move may need to assess their individual circumstances and weigh up their affordability based on current rates, with the potential cost of waiting or paying rent for longer.”