Monday 12 March 12 2018

Monthly Lettings Index – February 2018

Average landlord who sold in 2017 gained £86,651

  • The average landlord who sold their rental property in 2017 did so for £86,651 more than they paid for it, having owned the home for an average of 8.7 years.
  • London landlords who sold in 2017 gained an average £253,981 – over four times more than the average landlord selling outside the capital.
  • The average owner occupier selling in 2017 made a bigger gain (£92,886) than a landlord (£86,651) as they owned their property for longer.
  • Rental growth slowed to 2.1% in February down from 2.4% in January, but was supported by increasing rents in London.

The average landlord who sold their rental property in 2017 made a gain of £86,651 (table 1), having owned their home for an average of 8.7 years.  The average gain from a landlord is up slightly from £86,302 in 2016.  Sellers in London gained £253,981 (table 1) on average in 2017, over four times more than those selling outside the capital.  In fact, one in four landlords (28%) who sold their home in London did so for at least twice what they paid for it an average of 8.1 years ago (table 1).  

Landlord gains are slightly behind owner occupiers, who on average made £92,886 when selling their home in 2017. The average owner occupier made 7% more than a landlord when selling their home last year. This is because the average landlord selling their property in 2017 owned it for 8.7 years, rather than nine years for an owner occupier.

With the highest house prices and strongest capital growth over the last nine years, landlords who sold in London and the South East generally made the biggest gains.  Eight of the ten places where landlords made the highest percentage gains were in London, with Maldon in Essex (118%) and Pendle in Lancashire (109%) being the only exceptions (table 2).

Landlords in the North East made the smallest gains, £23,874, over 10 times less than a landlord in the capital (table 1).  Landlords selling in Selby in North Yorkshire made the lowest percentage profit of 14%, but still made £9,703 on average.    

The average cost of a new let rose to £954 pcm in Great Britain in February 2018.  But the rate of annual rental growth slowed to 1.5%, down from 2.4% the previous month.  Rents in London grew-faster than any other region for the third month in a row to stand at £1,686, 3.1% above last year’s level.  Scotland was the only region to see rents fall in February.

Commenting Johnny Morris, Research Director at Countrywide, said:

“House price growth has driven investor gains.  Landlords selling in 2017 owned their homes for nearly nine years.  In 8 of those last 9 years house prices have risen.  Even in areas where price growth has lagged behind most landlords have made a profit from rising prices.

“Rents continued to grow in January. London continues to see the greatest falls in the stock of available homes to rent, on the back of reduced investor activity, this scarcity of supply is driving rental growth.”

About the Countrywide Lettings Index and new methodology

The Countrywide Lettings Index has been running since 2012 and we continually seek to improve its accuracy.  From June 2017 the methodology was changed to reduce the impact of seasonality and volatility in the rental market.  

While the index remains a mix adjusted series, rent and rental growth figures for each month are now based on a three month rolling average rather than lets agreed in the last month.  The most expensive decile of homes let has been excluded to reduce volatility and the mix has been updated to include the most recently published government stock statistics.

The Countrywide Lettings Index uses data from Great Britain's largest letting agent to track changes to the cost of renting.  The index is based on the 90,000 homes let and managed by Countrywide in each year, adjusting for their location and type.  It is based on achieved rather than advertised rents and the published monthly rental figures are an average of the new lets and renewals of tenancies over a rolling three month period.