Buy to let investors around the UK have returned to the market following a lull in purchases after the stamp duty surcharge deadline in April, says one report.
Rightmove says in its report that the third quarter of 2016 saw a growth in enquiries from potential buy to let landlords which have risen by 30% since May.
This follows a short-term drop in enquiries after the 3% stamp duty surcharge was brought in for second homes on 1 April.
The Rental Trends Tracker from Rightmove revealed that new rental listings are 6% higher in the third quarter this year than for the same period last year and average rents have risen by 0.5% in every quarter or 3.2% year-on-year.
Average rent in the UK
The average rent in the UK is now £779 per month though rents for landlords in London are still continuing to fall - they dropped by 0.7% in the second quarter and by 1.5% over the year. They are now, on average, £1,885 a month.
The report also reveals the most in demand area for buy to let properties outside of London is Ashton-under-Lyne where tenants are paying £524 per month for a two-bedroom property, with Wellingborough in Northamptonshire coming second where the average rent is now £660.
The report also reveals where the best returns for buy to let investors are and for landlords in Southend in Essex they have seen house price growth lead to a return on their investment of 14.7%.
That because the average house price increased from £187,515 at the turn of the year to reach £210,353 in the third quarter.
Buy to let investors in London
For buy to let investors in London, the best returns are being seen in East Croydon where landlords enjoyed returns of 13.8%, and in Greenford where landlords saw returns of 30.4%.
Sam Mitchell, Rightmove’s head of lettings, said: “Buy to let investor activity bounced back after the stamp duty changes though there are some agents reporting that investors are still wanting to knock sellers down on asking prices to make up for the additional stamp duty they have to pay.
“Despite concerns that the changes in stamp duty would lead to a drop in stock, new rental supply is holding up.”
Price correction warning with BTL tax changes
Meanwhile, one mortgage firm is warning that prices for UK residential property could be set to drop sharply because of the upcoming buy to let tax changes.
The warning comes from Landlord Mortgages' Lee Grandin who says that the changes to mortgage interest tax relief, the stamp duty surcharge as well as tightening of mortgage lending criteria means landlords will find it harder to make a profit from their investment.
He adds this will put off landlords from buying property which will effectively push prices down.
Mr Grandin said: “Commentators say the property market is overvalued so the sudden supply of property after the buy to let tax changes come in could be the catalyst for a big price correction.”
