According to recent figures, the average rent in some areas, particularly in London, is rising much faster than tenants’ incomes, which could spell bad news for landlords in the worst hit areas. Rents across the UK rose by 2.6% last month whereas incomes fell by 1.2%.
How are these changes affecting UK landlords?
These changes are affecting the buy to let market in a number of ways: more tenants are choosing to share accommodation as a way of saving money whereas others are moving away from the more expensive areas in an attempt to find cheaper accommodation elsewhere.
However, affordability in the buy to let sector does vary across different areas of the UK. In Wales, the North West and North East, the average rent has fallen slightly over the last month, but everywhere else rents continue to rise. In the long term this will cause problems with increasing numbers of tenants defaulting on their rental payments, which is not good for landlords.
Cuts in housing benefits are also exacerbating the problem and a survey by the NLA has found that many landlords are choosing not to rent their properties to tenants in receipt of Housing Benefits because the payments no longer comes close to covering the rent. These changes will inevitably force many tenants on benefits into shared accommodation, as they won’t be able to afford a flat or house. Because of the cuts, around 53% of landlords surveyed said they would no longer be letting properties to tenants on benefits by 2015.
Are you one of them?
