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London leads the way for landlord profits

Results of separate surveys on the residential letting market show that potential landlords should be thinking of buying properties and getting landlord insurance in and around London.

A report by LSL Letting Agents reports that landlords now get an average of £689 per month in rent, according to their September figures. The survey on 18,000 properties has shown incremental increases each month since February and is at its highest since 2007 when they started collating figures.

However, although the report indicates an average increase, other experts in the industry point out that the runaway profits in the London letting sector, where average rents are now approaching £1000 a month is hiding the problems that landlords in other areas of the country are facing.

David Salisbury, the chairman of the National Landlords Association, said “Research by BDRC Continental has shown 58% of landlords did not increase their rent in the last 12 months and a further 12 per cent actually decreased it. The survey also found more than two-thirds of landlords have no plans to increase rents over the next three months. The reality facing the sector is one of VAT increases, expected interest rate rises and a current lack of mortgage finance, all of which landlords have to cope with.”

The figures seem to bear out his argument as well. The average total annual return on a typical rented property in England over the past year is 10.4 % which equates to £16,567. The figures in London for the same period are an average total return of £34,000.

Speaking about the situation in the capital David Brown, of LSL, said “There is an acute lack of affordable housing in London, and would-be buyers cannot meet higher house prices – or get big enough mortgages. With rental properties so sought after in the city, landlords have been able to continually hike rents since January.”