Looking at both Residential and Commercial
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There are many contradictory reports, here is a bullish one:
London rents at record levels as buyers fight for mortgages
Russell Lynch .. 15.10.10
London landlords have pushed rents to an all-time high as frustrated first-time buyers are forced to spend longer as tenants.
Rents in the capital have risen by seven per cent already this year to an average of £972 a month, according to latest figures. The average terrace property is renting for £1,162 month, with the average flat costing £916.
The increases are being driven by the shortage of housing in the capital combined with a continuing scarcity of mortgage finance, according to LSL Property Services. Potential purchasers are delaying buying their homes while they put together the deposits needed to access mortgage finance.
David Newnes, estate agency managing director of LSL Property Services, said: “Landlords have seen tenant demand continue to hit new heights. The mortgage market remains tight and many buyers simply cannot get the finance to get a foot on the property ladder.
“And with potential spending cuts on the horizon, and uncertainty over the direction of the economy, many buyers are choosing to remain in rented accommodation for longer.
“As a result, demand for rental accommodation is increasing, and supply is not rising fast enough to match it.”
The imbalance between supply and demand is particularly acute in London, where rents soared by two per cent last month alone.
Across the country as a whole, the cost of renting a home is now 3.1 per cent higher than it was last year and above the previous high reached in August 2008.
The rise means an investor buying a buy-to-let property could expect to make a return of 9.2 per cent — an average of £15,592, once both rental income and house price growth is factored in.
Many tenants still struggle to keep up to date with their rent. Arrears levels fell slightly during the month, but about 10 per cent of rent remained unpaid.
(Comment from there, on the inaccuracy of the article - typical BTLer-BS?):
"The rise means an investor buying a buy-to-let property could expect to make a return of 9.2 per cent — an average of £15,592, once both rental income and house price growth is factored in."
Yields in London are about 5%, but house prices are falling rather than rising, so the overall return is less than zero.
The figure of 9.2% might have been correct a year ago but it's laughably inaccurate at the moment.
- Ben, London, 15/10/2010 13:20
One of the drivers - falling Household sizes