Cycle of Increasing Rents
What we are going through at the moment, is a cycle of increasing rents. You’re going to have interest rates slowly creeping up. You are going to have rents not just creeping up; they’re going to jump up, because what we’ve just come through is a growth spurt. If you go back in history and you start to have a look at the dynamics of what has happened in the past, you’ll see that that is exactly what happens.
Even if you buy something today that is only neutral, over time that property will become more positive because rents will increase. In some parts of the country we’re still looking at having queues and bidding wars over rental properties because they’re just so hard to get. They are having, for example, mini auctions over a property to rent.
That is obviously having an upward trend on the rental returns which – you know if you are renting it might be a bad thing, but if you are a landlord it is a very good thing. When you compare our rental yields to others around the world we are still low.
So the trend has to be up. They have to increase. Even if you are buying something now that you say is a little bit positive, it is not too much and it is a good core property and it is a property that you want to keep in your portfolio for a longer period of time, then your yield on that property will go up simply because the push on the rents at the moment is up.
We always recommend that you seek professional advice as this blog is for general information only