Lettings Market On Fire - Rental yields now highest for six years

Supply and demand, no different to the present secondhand car / van market

Beware the new resentful bitter tenant enquiry for your properties. Very much used to paying below the market rate. Leaving cos the Landlord is selling!! Angry that they can’t just waltz up and move in with minimal references with all their pets. Angry that we are able to pick and choose the best applicants.

• Andrew townshend
• 27 January 2022 10:15 AM

The world is full of the lazy bitter and twisted who won't help themselves, leave them to councils to house in their sub standard damp properties on no go council estates.

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I don’t understand any of this or how they work out yields so I won’t pretend I do.
I thought it was the price of the property relative to the rent you receive, less your costs including repairs & maintenance and now factor-in Section 24 it all impacts on your return. So keep in mind a Terraced or Semi Detached house in West London costing at least double as much as a similar house in Nottingham where they are talking about 8%+ yields as apposed to 4%+ in London average figures, so mine is well below average and hammered with Regulation’s that apparently haven’t impacted on them yet, for any new buy 2 let LL they’ll think it’s a piece of cake, the tables are very misleading in my view.

• Grumpy Doug
• 29 January 2022 16:31 PM

Michael, agents use the gross annual rent relative to the sale value (or current value) of the house - gross yield. Most experienced landlords know this is very finger in the air. I work on return on capital employed - ie what I have invested (my skin in the game or my equity) relative to net rent after mortgage payment. Obviously this doesn't take account of expenses, taxation etc, but it's still a much better benchmark for me than gross yield. This gets better over time assuming that a) rents stay strong, b) house values increase and c) I don't re-mortgage (or at least not too much)

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So yields are the same as they were six years ago, which suggests they dipped and have now recovered. I wouldn’t describe the rental market as being on fire - there is a shortage because many landlords have sold up or converted to short let’s as a result of tax increases and increasingly anti-landlord rhetoric from the government and media.

As Andrew Townshend says above - supply and demand. Politicians have bashed landlords, complained about them, increased taxes, and never tire of adding regulation and restrictions while at the same time have been equally proactive in stripping away accountability and responsibility for irresponsible tenants. Landlords have seen the direction things are going in and got out. Now there’s a shortage and renters are struggling to find properties to rent which undoubtedly drives up prices and allows landlords to be far more picky who they rent their properties to.

No doubt the politicians answer to the mess they have created, will be to carry on with all the above to make the mess worse, and then conclude they need to do more of the above to fix it. All the while blaming the few landlords that are left for some reason.

• John Hughes
• 28 January 2022 08:33 AM

Brilliant comment.

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As said in the first post..... supply and demand, and the supply is about to get a whole lot thinner when the EPC C comes to town, then watch the scrabble for properties really hot up, it will be akin to a childs birthday party where the kids are running around a smaller and smaller number of chairs to sit on.... then the music stops !!!

• John Hughes
• 28 January 2022 08:39 AM

They have pushed the boundary twice on these EPC's.
What's to stop them from asking for a 'B' rating somewhere down the line?
They are obsessed with making life as difficult as they can for private landlords.
Where I am in Wales, we have the Rent (not so smart) Wales imposing new regulations on us in July, giving tenants more protection from legitimate landlords, whilst the 'rogue' element just ignores the debacle.

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James Brokenshire MP deceased, who was then Secretary of State for housing, first announced the governments intention of outlawing section 21 in early 2019. Two Prime Ministers, an election, UK exiting of EU, a pandemic and the fall of Afghanistan later Eddie Hughes MP Minister for levelling up now states that the delay in publishing a white paper on Renters Reform is due to not wanting to cause any unforeseen unintended consequences but I'd have thought a blind man could see what a catastrophe it will be for the PRS when no fault eviction section 21 is outlawed. What's going on.