Rental Market Commentary February 2010
Rental incomes show a bit of move upwards this month, giving mixed signals as to what will happen to rental prices in 2010. It's still likely that as Xmas and the cold weather is over that more people will decide to rent. As a result rental increases are more likely to be around 5% this year rather than the possible 10% Q4 2009's data suggested might happen.
Investigating what is happening seem to show that some areas and property types- as with property prices - are 'recovering' to a point where supply is just under demand, nudging prices up. As the figures reflect 'average' activity, sometimes poor performing areas dominate, so rents go down and at other times good areas perform, pushing prices upwards.
Buy to let borrowing is also improving, but tenants are still defaulting on landlords. New legislation coming in this year will add more costs to a buy to let business and legislation is almost at a level that will 'strangle' the industry and effectively cause those struggling to make BTL returns to leave the market altogether.
Read all about the latest leglislative changes that ARE already planned and those that are proposed. If you disagree with them - then ACT NOW! Don't delay or you could get hit with some very heavy regulation that dramatically increases the costs of your BTL business.
Regional Differences
'UK averages' don't really reflect what's happening in your area. Read the FindaProperty Index which shows:-
Top Performing Areas
North West England Rental Income 3.9% yoy, average of £615 per month giving a 4.67% average yield
Scotland Rental Income +0.6% yoy, +2.5% month on month and an average of £687 per month giving the highest regional average yield of 5.5% (according to FindaProperty).
Poor Performing Areas
Yorkshire and Humber Rental Income -10% yoy, average of £535 per month giving a 4% average yield
East Midlands and East of England Rental Income -5%+ yoy, average of £598 / £748 per month giving a 4.2% average yield for both areas.
Belvoir Lettings Regional Lettings Index
Belvoir is one of the top franchised letting agents in the UK and takes pride in ensuring they let quality properties legally and at fair prices. They have over 140 offices across the UK and kindly let us have access to their national and regional lettings index:-
The following figures show the South East has been quick to recover from rental falls and that London's rental market has turned a corner. Most areas bar the North East and East Anglia (suffering from outmigration) are still taking a while to recover.
Belvoir Region | Jul 08
to Sep 08 | Oct 08
to Dec 09 | Jan 09
to Mar 09 | Apr 09
to Jun 09 | July 09
to Sep 09 | Oct 09
to Dec 09 |
London | -2% | -2.4% | -1.75% | -5.51% | +7.48% | +11.19% |
South East | 6.9% | -2.8% | -4% | +1% | +3.25% | -2.63% |
South West | -1.4% | -1.0% | -3.6% | -1% | +0.57% | -0.58% |
West Midlands | 0.6% | -0.8% | +4% | -2.55% | -2.36% | +0.15% |
East Midlands | 1.6% | -2.6% | -2% | -3.32% | -0.01% | +0.15% |
East Anglia | -1.9% | -1.0% | +2% | -3.98% | -2.29% | 0% |
Yorkshire | 2.9% | 1.9% | +2.9% | -3.57% | -1.20% | -1.31% |
North West | 1% | -0.5% | -2.7% | -3.05% | +0.45% | +0.92% |
North East | 0% | 0% | -0.75% | -1% | -3.89% | +3.71% |
Scotland | 17% | -3.8% | -0.4% | -1.36% | -1.39% | +15.51% |
Whole of UK | 0% | -1.4% | -1.95% | -1.5% | 0% | +0.68% |
