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Residential buy-to-Let

Rental increases were fuelled by falling house sales in 2014

Author: Staff

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For the majority of the past two years, the UK’s rental and sales market have existed side by side, with both exhibiting real signs of strength. However, the buy-to-let market showed late in 2014 that it is the most likely to see long-term health, as it continued to see climbing demand as the number of people buying homes fell.

According to the latest findings published this week by Countrywide, while the market for sales had a very up and down year in 2014, with the number of sales climbing at concentrated points throughout and falling in others, rents were far more consistent.

Generally speaking, the number of tenants looking for somewhere to live will remain constant for much of the year. Even as 14 per cent fluctuate between rental and ownership, the number of households coming into the market in general who go into the rental sector is high month after month.

In the second half of the year, while the number of people who were looking to buy a home fell away, the rental market saw a strong seven per cent increase in the volume of new people registering to rent.

This meant that in just six months, the average rental rise came in at 4.2 per cent, far ahead of the average price of property to buy in the same period. This improved on the average 3.7 per cent rise in rents in the first six months of 2014, Countrywide added.

“The sales and rental sector are closely linked with thousands of households moving between the two tenures every year. In the second half of 2014, we saw a decrease in the number of tenants actively looking to buy. This has kept demand for rental accommodation at a high, allowing more landlords to stand firm in the face of attempted negotiation on rent,” said Nick Dunning, Countrywide Group commercial director.

For buy-to-let owners, what this means is that their chances of retaining high returns are now much improved. When demand is strong, landlords have the ability to keep their prices at the high levels they have been able to achieve in the last couple of years, keeping yields favourable.

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