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Buy To Let Landlords Are Enjoying The Fastest Rent Rises On Record

By Andy Shaw | January 23, 2010

Originally Posted 21st September 2007

Guess what? The prediction I made a few years ago is becoming a reality. I predicted that we would start to see upward rent rise pressure that would out perform the historical rates. It wasn’t a particularly difficult prediction as I knew that rents were already lower than they should be thanks to property investment landlords not applying adequate upward price pressure to their rents.

As I’ve mentioned before, there is always upward price pressure from the vendors when they sell their property, which makes estate agents increase the prices. But the landlord does not force rent up in the same way, as they are happier to rent it for a bit less just to get a tenant, which means that letting agents do not force up the prices.

The traditional increase has been 11.74% for property prices and 5.5% (approx) for rental prices. There are many reasons why rents have only increased at the 5.5% level, the other main one being affordability. But I expect over the next few years as investors need to increase the prices in order to get at their mortgage equity, we will find that this trend may actually out perform its historic level.

This is good news for investors from one point of view, but as such a large percentage of the population rent, that will raise the need for increased pay, which will raise inflation and this could mean higher mortgage rates. But that said, I think a balance will be struck. However, as there are so many areas across the country now with rents that are far lower than they should be, we will continue to see the headline rise out perform the historic trend. All this means is that we just have a price correction going on.

Now the new wave of buy to let investors are here and we are having to push up rents in order that we can release our equity, you can expect to see the upward rent trend continue for quite a while.

Andy

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