The UK may be suffering from Olympic blues now the London 2012 Games have ended, but one group of people are still smiling: landlords. While much was made of the short-term profits they could make from the Olympics rush, the long-term buy-to-let market is where the real medals are, with rents rising by over 4 per cent in the last year.
Indeed, as first time buyers continue to struggle to get onto the housing ladder, an increasing number are choosing to rent property instead. This demand pushed rents up by 4.3 per cent in the last 12 months, according to the latest RICS lettings survey.
The figures follow reports from property group LSL that monthly rents in London rose for three months in a row in June, hitting a record of £1,047, while UK rates were just £2 below the all-time high of £720 recorded last October.
As rents continue to rise, gross rental yields have climbed even higher, adds BM Solutions. Buy-to-let investors have seen yields edge up by 0.2 per cent in the last year, reaching an average 6.2 per cent in June. The capital's rents may be the highest, but outside of London, overall returns are even stronger, with the North of Britain offering yields of 7 per cent - another reason for landlords not to feel the Olympic blues.
It is no surprise, then, that buy-to-let investors are elbowing their way to the front of the queue. Buy-to-let lending increased by 5 per cent in the second quarter of 2012, according to the Council of Mortgage Lenders, with the volume of loans up by 14 per cent since last year.
Ten years ago, there were just 89,000 buy-to-let mortgages taken out in the UK. Now, the CML adds, that figure has ballooned to 1.42 million, worth a total of more than £160 billion.
But it does not stop there. According to RICS, rents are set to keep on growing as tenant demand continues to increase. In fact, the increase in demand has outpaced the change in supply in every quarter since the first half of 2009. That gap "does now appear to be narrowing", adds RICS, but it is still big enough to see rents increase by another 4 per cent in the next year.
Peter Bolton King, RICS Global Residential Director, commented: "It is interesting to see that the huge growth we have seen in demand in recent years has started to gradually slow. While tenant interest is still riding high, what remains to be seen is whether many are willing to meet the increasing rents being demanded by landlords.
"However, it is clear that we have seen rents grow steadily right across the UK for some time. This is partly down to the problem of the scarcity of mortgage finance and the large deposits required by lenders. These barriers to home ownership need to be addressed alongside the shortage of new stock coming to the market."
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