Insurance News Archive
Demand for rented accommodation is rising steadily, boosting the UK's buy-to-let sector, a new report reveals.
Research by specialist lender Paragon reveals that average rents achieved on residential investment properties have risen significantly over the last quarter, with landlords continuing to increase investment in the private rented sector.
The July Paragon Mortgages Buy-to-Let Index shows that average rents over the three months to June rose by 3.48 per cent (£351), with typical gross rental income on a property up by 2.39 per cent to £10,433 in June alone.
The lender reports that household numbers and inward migration figures are both growing in the UK, pushing investment property values up by 2.27 per cent in June 2006 and 7.29 per cent over the three months to £172,772.
Average total returns for landlords have soared from 11.89 per cent in January this year to 16.51 per cent in June, with the highest total annual returns found in Greater London (37.69 per cent) and East Anglia (37.61 per cent).
Paragon Mortgages managing director, John Heron, said: "Housing demand is growing, with more single person households, higher numbers of students as well as the effect of immigration.
"The Department for Communities and Local Government forecasts 209,000 households need to be formed per annum, with immigrants accounting for perhaps a third of new households. Such newly formed households are most likely to live in rented accommodation."
Data released last month by Paragon indicated that one in seven mortgages (14 per cent) is now for a buy-to-let property, more than double the percentage for 2001. Buy-to-let landlords are increasingly purchasing property to boost their investment portfolio or to supplement their pension.
07 Aug 2006