Ludlowthompson has revealed a significant rise in rental income over the last 12 months. With a 15% year on year increase, a massive surge from £16.2bn in 2015-16, to £18.7bn. This data suggested rents are seeing growth, driven by strong demand outstripping the current supply of housing. With figures revealing that over the last 5 years the total rental income has increased by 55%.
Attractive Buy to let mortgage deals have also encouraged investors to grow their asset base and take advantage of the current low rates. Buy-to-let property investments are a key part of individuals’ investment portfolios and their income in retirement. Investors can create a stable, regular monthly income, and can advantage from any potential capital growth. Given that property has historically been far less volatile than other asset classes, such as shares, many people prefer to invest in property rather than contributing to their pension pot.
Some of the increase in rental income will also be from rental growth, which means that rents are largely growing with inflation. Additionally, wage inflation has been growing steadily already over the past few months, and, historically, rental increases track wage increases. Ultimately, these figures highlight the real term growth in returns – the fundamental point behind any sound investment. The fundamental supply-demand imbalance remains with the pool of potential tenants getting larger each year.
As always, the market is flooded with options for investment, but bricks and water still offer something that stocks or shares can’t offer. One of the major benefits is having a direct control of an asset and options to exit. Whether an investor wants to hold a property for rental yield, remortgage to raise funds or sell for a capital appreciation gain.
Despite some negative media sentiment and changing market conditions. The UK property market continues to see healthy signs of growth, especially in regional cities beyond London. Cities such as Manchester, Birmingham and Liverpool, continue to offer great potential, with much more affordable price point than equivalent properties in the South. Also leading to stronger rental yields and less money spent on stamp duty.