Predicted rent rises could mean a prosperous 2016

In recent years, the rental sector has seen a significant improvement in tenant finances. The measure of arrears has almost halved since its peak at almost 15% at the beginning of 2010. Due to the combined strength of the labour market and earnings on the rise, there is greater affordability in the rental market, and investors are taking the opportunity to purchase additional properties to meet consumer demand.

Average rents are up 4% in comparison with December 2014 and rents in London are even higher with 8.9% growth year on year. According to the latest buy to let index from Your Move and Reeds Rains the average rent now stands at £799 a month. Despite month on month falls, average rents have increased considerably over the last year. When we take into account the CPI inflation of 0.1% it leaves real-terms annual rent rises of 3.9%. The acceleration of property prices has been a boost for landlords’ finances. Considering both rental income and capital growth, the average landlord in England and Wales has enjoyed returns of 10.9% over the last twelve months.

Next year could see a rise in rental amounts following the introduction of the new 3% stamp duty on buy to let properties. The changes announced by the Chancellor will spell good news for those investors and landlords wishing to expand their existing portfolios. Both the financial health of landlords and the resilience of the buy to let industry are set to thrive as the market heads into 2016.

When adding to your portfolio, it is essential that you locate the right property in an area that offers potentially attractive yields. Homes are currently being sold rapidly to owner occupiers as well as buy to let investors, and the need to close the gap between supply and demand is likely to push rents up in 2016. Tenant arrears have improved, but landlords should always be aware of the risk. Fortunately, with good communication and adequate vetting of potential tenants the risk of financial issues can be reduced.

Property management offers landlords and investors all the help they need to enjoy issue free tenancies and regular monthly returns on their investment. We provide a full service that covers every aspect of your property investment in Hounslow or any other part of the capital, from finding and placing tenants that can afford the rent and can be trusted to take care of the property, to carrying out inspections and collecting your rent every month. We offer property and estate management across London and we can provide professional and attentive support to landlords and portfolio holders.