The level of rents for residential properties rose in the first quarter of 2017 to their highest level since July 2016.
According to a May 2017 survey by the Royal Institute of Chartered Surveyors (RICS), rents increased in most areas of the UK in the first quarter of 2017.
Another report by property group ARLA said that the supply of rental stock increased by 11% over the last 12 months to meet the high demand. Due to increased costs, some landlords sold buy-to-let properties in the first quarter of 2017, but in May, the number of landlords selling properties fell.
Average rents vary between areas. This means that landlords need to carefully select the best areas in which to invest. The Rightmove Rental Price Tracker for the first quarter of 2017 found that London has the highest rents, followed by Bath.
Another area in the top ten for rental values is Manchester, with some properties in the city achieving a 9% rental yield on buy-to-let investments. Many areas of Manchester city centre are undergoing regeneration and this has attracted businesses to set up Manchester offices. There is a high demand for rented property from workers moving Manchester to work in these offices. With a shortage of property to fill this demand, rents remain high.
Landlords have faced cost increases due to higher stamp duty and cuts to tax benefits, but profits can still be made. Commercial mortgages with low interest rates are available to fund buy-to-let investing.