It seems strange to be covering the topic of rising rents experienced by buy to let landlords so recently after my last article on the topic. The last time landlords were making money hand over fist it was through capital gains caused by residential purchases booming due to loose credit. This time it’s caused by the opposite – rent increases caused largely by the inability of many households to either purchase in the first place or move to a new, larger home due to the extremely poor credit conditions.
LSL Report Growing Rent In All Regions For The First Time
Reading through the latest LSL group (one of the biggest estate agency and lettings groups in the country) press releases often gives a pretty clear insight into the condition of the market. Their September market report released on the 21st October revealed that for the first time since collecting this data began they saw increases in rent in all regions.
As a result, rents hit record highs in six regions –
London, the South East, Yorkshire and the
Humber, the East of England, Wales and the
LSL September Lettings Report
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With many landlords experiencing stagnant property price growth this extra cash is a crucial addition to their buy to let business – either allowing them to move further into profit or put some cash aside for future growth in their portfolio, repairs and upgrades.
Rates Look Set To Hold Until Next Year Giving Landlords Ample Opportunity To Lock In Profits
As the economic situation continues to look tough and little end in sight for the Euro Zone crisis it now looks extremely improbable that there would be any base rate increase this year. With buy to let competition increasing this has pushed buy to let rates much lower and brought in some competitive longer term fixed rates.
Fixed Rate buy to let mortgages are becoming increasingly appealing as small changes in base rate over a 2-3 year period could leave many landlords with a rental shortfall whereas 5 year fixed rates are available which would protect landlords profits for that entire period.
It’s important that landlords don’t become blinded by the exceptionally good market conditions now and assume this will last forever – the exact mistake landlords made during the last boom. Consider paying down some debt instead of adding property beyond what you can comfortably manage. Also consider that rates will go up at some point and a fixed rate now can protect you – it might seem counter-intuitive but fixing when rates are low can yield you some great benefit in the long run.