Rents start rising again

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The lack of supply is “boosting” the rents to be higher, which indicates the slow recovery of the buy-to-let market.

According to the latest Royal Institution of Chartered Surveyors (RICS), “The UK lettings market experienced a revival in the quarter to April as supply struggled to keep up with the rising demand”.

Indeed the tenant’s demand to rent a property accelerated the rise of the rent since the first quarter of 2009.

Landlords saw an increase in rents for the third consecutive month. Average rents in the UK during April were £633 a month, up 2.2% from a year ago, according to research by LSL Property Services.

Demand for property to rent remains strong with 30 %, houses remain slightly more popular than flats but they are starting to come back as well. Moreover the fact that rents are increasing and that buy to let agents are starting lending again will allow attract new investors in the market.

David Brown, of LSL Property Services said: “Despite the distraction of the election, the buy-to-let market has gone from strength to strength, and landlords have seen their highest rents and yields this year.

But there is still a question that needs to be answered, how the increase of the CGT mentioned on previous articles will affect that rise of rent?  As reported in the Financial Times, “property experts have warned there will be a major sell-off of investment properties and second homes as well as further dampening in house prices if capital gains tax (CGT) is raised under the new coalition government”. This could lead to house prices falling as supply outstrips demand.

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26th May 2010