Rents stabilised in May at £696 and house price rises have caused yields to fall, but they remain 0.3% higher than a year ago. Outlook for total returns is stronger as capital appreciation becomes a real possibility again.
Keshav Thukaram, managing director of smartlandlord.co.uk, explains that demand in commuter areas outside London is rising particularly fast: “Areas just outside London that have traditionally been dominated by the owner occupier market, have recently experienced a surge in tenant demand as people suffering from credit crunch malaise look to flee the city. The phenomena of green shifting is not confined to home buyers, and more and more tenants are looking for the better value for money and improved quality of life they can get from renting outside London. Areas of the South East with good transport links are particularly popular and a good investment for landlords looking to expand their portfolios at the moment.”