Drop in house prices will encourage landlords to invest

 

A report out yesterday from the UK’s leading building society showed the biggest one month fall in house prices for more than three years as the difference between prices in May and June fell by more than 0.6%. The news will shock many home owners planning to move houses but will only reinforce the confidence felt by many property investors across the country. Already reports show many landlords are looking to expand their portfolio and evidence shows they are prepared to consider many types of property if they can see a profit in the making. The news will be welcomed by landlords who are planning to purchase buy-to-let property in the next three months and may well convince other landlords to purchase landlord insurance on new properties.

Meanwhile, rents in the capital have increased for a second consecutive month and are now at a record high of £1,038 per month. Interestingly enough this is an increase of 0.6% over last month. The latest buy-to-let figures showed the average rent in England and Wales rose by 0.4% to £712 per month. This is one of the reasons so many private landlords are seriously looking to increase their portfolio of properties. Rents declined in only four regions, with the largest fall in the North East, where they went down by 1%.

David Newnes, director of LSL Property Services, recently said “The end of spring has brought with it renewed activity in the rental market and rents have returned to the level seen before the impact of the stamp duty deadline rush by first-time buyers. The reality is that thousands of frustrated buyers are still financially trapped between a rock and a hard place. Historically high rents and rock-bottom savings rates are hampering attempts to save for the larger deposits banks now require, not to mention meeting the cost of the reinstated stamp duty tax. In turn, fewer tenants are able to leave the sector, and the strong tenant competition is pushing up rents as a result, making saving for a deposit harder still.”

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