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Private rental landlords enjoy steady returns as rents firm

UK residential rents slowed in November, falling for the first time in eight months. But the trend remains modestly upward, giving landlords a steady return on their property investments.

The seasonal slowdown saw rents drop an average 0.2% month on month, according to Your Move and Reeds Rains. The average monthly rent is now put at £768 per month, up 2% on the same time a year ago.

“Not only are wages higher than a year ago and wider inflation dropping rapidly, but now rent rises are cooling once again too,” commented David Newnes, a director at Reeds Rains. “For those tenants still reeling after half a decade of financial pressure, a more affordable rental market is another welcome boost.”

The East Midlands is the strongest region, seeing rents continue to rise – they were up 1.7% from October to November 2014. In the South East, rents fell 2.1%, while in the North West they also dropped, by 1.2% month on month. Landlords in the East of England have enjoyed the strongest local market, with rents up there 6.7% year on year.

Property yields are around 5.1%, while total returns improved during the month and are now calculated at 12.8% for the last year. “Property prices have shifted to a more sustainable pattern,” said Newnes. “And that is only a good thing for landlords, just as it is for those looking to buy their own home.  Rental income is also steady – with average gross yields hovering just above their long-term 5% average for over a year now.  This makes buy-to-let a haven from the insecurity stalking other investments – though careful attention to detail, local knowledge and an eye for cash flow on areas like maintenance are always essential ingredients in realising the best possible return on any investment.”

“At this time of year big picture improvements are always tested, as festive financial pressures mount. But as a whole, 2014 has been remarkably positive in terms of the affordability of renting – which is just as positive a note to end the year on for landlords as for tenants themselves.”