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Rents on the Rise as Landlords Prepare for Stamp Duty Changes

Rental rates are at their highest since November 2014 according to a new report.

UK Landlord Property Investment

Rental rates are at their highest since November 2014 according to a new report.

The monthly buy-to-let index from estate agents Your Move and Reeds Rains found that in January 2016, rental rates had increased by 3.6% year-on-year, rising to an average of £790 per month. This follows the 3.4% year-on-year growth seen in December 2016.

The year to January saw landlords achieve a 12% return on their buy-to-let investments, with a cash value of £21,988 on average. The figure was calculated to factor in both the rental returns achieved from the property as well as the capital appreciation achieved on the property price.

Regionally, the highest increases in rent were found in the East Midlands, achieving £605 per month equating to a 5.9% increase and in London, where the buy-to-let powerhouse continued to perform, with rents reaching £1,241 on average, up 5.9% on last year.

At the other end of the market, rents in the South East fell by 1% to an average of £763. Usually aligned with the trajectory of the London markets, a decrease in rental levels in the South East has come as unexpected to the market. Elsewhere, the North East also saw a decrease of 1%, with the average rent falling to £512 per month.

Figures released by the Office for National Statistics have also indicated that house prices in the UK have risen again, rising 6.7% in the year to December 2015, with the average house price now sitting at £288,000, increasing by £6,000 since last summer.

The news of increased house prices and rental returns comes as landlords prepare for the increase in the Stamp Duty Land Tax levy. Due to take effect on April 1st, an additional 3% charge will be applied to normal Stamp Duty rates for the purchase of any second homes or buy-to-let properties.

A survey by the Residential Lettings Association (RLA) found that 46% of landlords in the UK are now rushing to complete their purchases of additional properties before the April deadline.

Recent research from the Royal Institute of Chartered Surveyors found that nearly three quarters of property professionals felt there would be an increase in property sales in the lead up to the Stamp Duty deadlines, with UK property prices due to rise further as a result of increased market activity in the first quarter of 2016.

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