Essex makes top investor hotspot
Although this is indeed great news for landlords, particularly in the East of England which has outperformed all other regions in the UK including London in terms of price growth, the news will not be greeted warmly by the growing number of tenants in the region.
The research, which was conducted by the Centre for Economics and Business Research, predicts rents will rise from a current UK average of £134 per week to £171 in 2025. And the proportion of private renters in the UK will rise from 20 per cent of households in 2015 to nearly 29 per cent by 2025. So fewer people will own their own home.
Tenant demand continues to be high, boosted by first-time buyers entering the market later in life, and other socio-economic factors such as more people living alone for longer. However, the availability of good quality properties to let is limited. These factors combined results in rent increases. Furthermore, the financial pressures of increased rental costs for landlords may also have an impact on prices. For example, the new extra 3 per cent stamp duty which will be introduced from April 2016, the reduction in allowable expenses for tax purposes, and the administration of the new right to rent law could all trigger rent rises.
However, from an investment perspective, property is still very much at the top of the agenda, and the East of England has been named one of the top property investor hotspots, according to the latest Rightmove Rental Trends Tracker.* Towns here dominate the top 10 places where landlords get the highest total return on investment outside of London, with most of the hotspots located in Essex. The annual rental growth is the highest of all regions having risen 6.4 per cent, which is more than double the rate of London.
Joe Hall, Fenn Wright’s head of business development for the lettings divison comments: “This comes of no surprise as we have been noticing a surge in tenant and investor demand for a while, across both Essex and Suffolk, as they have been priced out of London. With easy commuter links, an improved quality of life and better value for money, it’s easy to see why people are choosing to live here. Meanwhile for buy-to-let investors, many areas around here have suitable properties under the national average price, making it affordable for them too.
“This area is clearly racing ahead of other regions in the country, including London, so I’m looking forward to seeing what the future holds for the lettings market.”
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