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If you’re considering expanding your property portfolio, now could be the perfect time. New figures from a leading buy to let index show that rents in the UK hit a new high in September as the demand for rental properties continues to remain strong. The latest index from LSL Property Services showed that rents hit a new high of £741 per month in September. UK rents were up 1.1 per cent, eclipsing the previous record of £734 recorded in August. Keep reading to find out more about the excellent potential benefits that buy to let can offer you. The average investment property should generate over £15,000 in the next year The data from LSL showed that rents climbed by 3.2 per cent across England and Wales on an annual basis - the fastest annual increase since February. September saw rents rise in seven UK regions, with London and the South East showing the strongest increases. Rents rose in these regions by 1.7 per cent and 1.9 per cent respectively. The figures showed that London rents reached a record £1,092 per month - the fastest monthly rise since November 2010. Rents have risen by London by 6.2 per cent in the last year. David Brown, commercial director of LSL Property Services, said: “Rents have risen consecutively for half a year as tenant demand strengthens on the back of a historically subdued mortgage market." However, every pound monthly rents go up by is another pound that renters can’t save for a deposit for their first home. This is lengthening their stay in rented accommodation, and increasing competition in the private rented sector. Islay Robinson, director of London mortgage adviser Enness Private Clients observed that mortgages are continuing to be difficult to obtain and demand for rental property has increased over recent years resulting in higher rents. Clearly, this is great news for high net worth mortgage clients who are investing in good quality buy to let property in London and further afield. Yields are increasing as rents rise, and with the property market set to recover over the next few years, high value mortgage clients are also set to benefit from capital growth. Mr Robinson’s observations were borne out by the LSL data. Landlords saw an average total annual return of 6.2 per cent on a rental property in September, up from 5.5 per cent in August. Mortgage Introducer reports that ‘this represents an average return of £10,216 with rental income of £7,909 and a capital gain of £2,307.’ If rental property prices maintain the same trend as the last quarter, you could expect to make an average total annual return of 9.2 per cent per property over the next 12 months – equivalent to £15,226 per property. Mr Robinson, a specialist in large mortgages from London mortgage broker Enness Private Clients, added: “While tenants may be seeing their rents go up, this is good news for high net worth finance clients. Record rents are making property more desirable as an investment and the returns can far exceed those of shares or cash savings.”
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