The Landbay UK Rental Index launched in mid September, with a view to allowing the platform’s investors to allocate funding to the platform in a more considered fashion. The first batch of results from the index have highlighted a number of geographical hotspots that investors may look to take advantage of.
The numbers show that UK rents are rising fastest for 3 bedroom homes. Such rents grew 4.6% year-on-year in August, compared to a 3.3% for all UK properties. The rate being paid by tenants outside of London grew most rapidly in Windsor and Maidenhead (up 22% to £1,936), Southend on Sea (up 20% to £1,121) and Stirling (up 13.7% to £1,050). The full breakdown of fast-rising locations is available below.
Counties outside of London
Annual rental change (August 2015)
Average rent
Windsor and Maidenhead
21.5%
£1,936
Southend on Sea
19.6%
£1,121
Stirling
13.7%
£1,050
Dundee City
13.4%
£782
Swindon
12.6%
£813
Luton
12.3%
£938
Essex
11.3%
£1,116
Milton Keynes
10.5%
£983
Poole
10.4%
£1,223
Hertfordshire
10.3%
£1,396
Bedfordshire
8.8%
£884
Medway
8.7%
£861
Edinburgh City
8.3%
£1,200
Slough
8.2%
£1,271
Leicester
8.1%
£673
Kent
8.0%
£1,042
Wokingham
7.7%
£1,280
Newport
7.3%
£603
Gloucestershire
7.0%
£889
Portsmouth
7.0%
£960
The figures also show rents to have climbed by 3.3% (to £1,281) across the country as a whole. That rate of expansion is well ahead of inflation (CPI grew 0.1% in the year prior to July 2015). The rate at which UK-wide rents are growing has dipped a little from a high of 4.9% in February to the current level. Could this be a red flag for investors? John Goodall, co-founder and CEO of Landbay, weighed in:
“At the national level, rents performed very strongly in 2014 after a dip in 2013. This year has seen rents continue to grow, but at a slower rate. The macro trends at the national level aren’t uniform when you drill into the local level and look at different types of property, which is why we want to establish a rental index that gives landlords, tenants and others interested in the private rented sector access to a more granular level of insight.”
The peer-to-peer space has been at pains to provide investors with cold, hard performance data. A large number of the UK’s best-established platforms have published their complete loan books. Zopa,Funding Circle and RateSetter are constituents of the Liberum AltFi Returns Index (LARI). Landbay recently commissioned a third party data analytics firm to stress test its loan portfolio. These initiatives shed invaluable light upon the respective credit-related abilities of the individual platforms, and indeed of the sector as a whole. But for the secured buy-to-let mortgage platform Landbay, the income-generating capacity of the underlying assets is an equally important consideration, and the Rental Index should serve as a useful guide to investors in this regard.
