At last, we have good news for all those poor so and so’s renting in London. Not so good for the buy-to-let market, and for more than one reason.
According to Home Let, the average rent of a property in Greater London has fallen from £1,538 in May 2016 to £1,502 in May 2017, a fall of three per cent.
London was not the only region to see year-on-year falls in rents, they also fell the South East, minus 1.5 per cent, Scotland by minus 1.9 per cent, and the North East by minus 2.3 per cent.
Annual rents did rise in the South West, Wales, East of England, Northern Ireland, and the West Midlands.
Across the UK, average rents fell by 0.3 per cent, to £901.
But if we exclude London, average rents rose by 0.5 per cent, to £753. But then month-on-month, average rents excluding London fell in May by 0.1 per cent.
As it happens, even without falling rents, the next few years will see a major blow to the buy-to-let market.
Up until the end of the last financial year, a buy-to-let investor could offset the interest they paid on a buy-to-let mortgage against income from the property for tax purposes.
For this financial year, this began to change. The change is being phased in gradually, but it means that by 2020/21, a buy-to-let investor who pays tax at the 40 per cent rate, would only be able to offset half of the interest they pay against income.
Falling rents – good news for tenants.
For buy-to-let investors, a troubled time seems to lurk.