Posts with tag: rental yields

Fastest rental rises in January seen in the East

Published On: February 24, 2017 at 9:47 am

Tags: average rents,rental market,rental yields,rents

Another new piece of research has underlined the fact that the rental market in England and Wales has seen a strong start to 2017.

The latest Your Move England and Wales Buy to Let Index shows that rents rose in all but one of the right regions analysed in the year to January.

Eastern Rises

Rents rose fastest over the year in the East of England, where average rents now stand at an average of £870pcm-a rise of 6.9%. Rental price growth in the region was also the quickest month-on-month, with rents up by 0.7% in January.

Other regions experiencing strong growth were Wales and the East Midlands, with rents rising here by 6.5% and 4.5% respectively.

In Wales, the average rent stands at £586pcm, while in the East Midlands, this figure is £634pcm.

On the other hand, London saw rents fall most quickly in January, down by 0.4% month-on-month. The North West was the only other area to see prices fall, albeit by an average of just 0.1%.

Fastest rental rises in January seen in the East

Rents

Taking England and Wales as a whole, average rents stood at £798 in January 2017, up from £790 in the same month last year. This represents a fall from the £811 recorded in December 2016.

Valerie Bannister, letting director at Your Move, noted: ‘Rents in nearly every region surveyed have increased compared to the same point last year.’[1]

It comes as little surprise to learn that London was the region with the lowest rental yields. Homes in the capital returned 3.2% on their investment in the last month, down from the 3.3% recorded in December 2016.

By contrast, investors in the North East are enjoying the strongest yields. In this region, the typical property returned 5.3% in January.

In England and Wales as a whole, the typical rental return was 4.6%, below the 5.1% seen in January 2016.

Concluding, Bannister said: ‘Yields continue to be squeezed in most areas of England and Wales, with all regions recording lower returns than at the same point a year ago.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/rents-are-increasing-fastest-in-the-east-of-england

Where are the best regions for buy-to-let yields?

Published On: February 13, 2017 at 12:56 pm

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,buy-to-let yields,investors,rental yields,yields

New research from property peer-to-peer lender Kuflink has looked at the average rental yield in 50 major UK towns and cities to determine where the best locations are for investors.

The data shows that properties in Manchester and Salford led the way, with typical yields of 6.7% and 6.6% respectively. Hull, Luton and Rotherham saw the most prominent increases in average rental yields during the final quarter of 2016.

Returns

Despite the large rents available in southern England, yields in the North are normally greater, reflecting the varying property values in the two regions.

Cambridge for example, gives an average rental yield of just 2.7%.

The top-ten towns and cities in the UK in terms of rental yields were found to be:

Town	Region	Average rental yield (%)
Manchester	North West	6.73%
Salford	North West	6.68%
Portsmouth	South East	5.75%
Leeds	Yorkshire	5.67%
Cardiff	Wales	5.59%
Coventry	West Midlands	5.37%
Southampton	South West	5.19%
Nottingham	East Midlands	4.90%
Birmingham	West Midlands	4.73%
Stockport	North West	4.65%

At the other end of the scale, the ten towns and cities with the lowest average rental yields were:

Town	Region	Average rental yield (%)
Cambridge	East	2.73%
Chester	North West	3.04%
Chelmsford	East	3.07%
London	South East	3.25%
Wolverhampton	West Midlands	3.27%
Carlisle	North West England	3.29%
Doncaster	Yorkshire & the Humber	3.39%
Wakefield	Yorkshire & the Humber	3.41%
Rotherham	South Yorkshire	3.54%
Northampton	East Midlands	3.57%

Where are the best regions for buy-to-let yields?

For rental yields, the top-ten towns and cities seeing an increase in average yields were:

Town	Region	Average rental yield (%) Dec 2016	Average rental yield change (%) Oct-Dec 2016
Hull	Yorkshire & the Humber	3.78%	0.31%
Luton	East	3.91%	0.30%
Rotherham	South Yorkshire	3.54%	0.28%
Swansea	Wales	4.14%	0.26%
Dudley	West Midlands	3.72%	0.25%
Cambridge	East	2.73%	0.23%
London	South East	3.25%	0.23%
Aberdeenshire	Scotland	4.31%	0.23%
Edinburgh	Scotland	4.09%	0.22%
Doncaster	Yorkshire & the Humber	3.39%	0.20%

Available Properties

In addition, the research shows that there are now fewer than 41,000 homes under £250,000 in the UK, down from 58,000 in October.

London has just 2,000 properties for sale under £250,000, with prices continuing to soar. Birmingham saw the largest drop in properties available under £250,000-showing a decrease of 1,373 homes between October and December 2016.

Tarlochan Garcha, CEO at Kuflink, noted: ‘The rift between north and south continues, but this time the attention is turning north. Buy-to-let properties in the North can be a steady investment, attracting renters who cannot afford to step onto the property ladder and therefore choose to rent in good locations, which are well-suited to their lifestyle.’[1]

‘Manchester and Leeds are both bustling cities, popular with young professionals and families, and can offer solid returns for landlords. While Birmingham, which has a growing business district and is soon to benefit from HS2, cutting journey time to London to just 49 minutes, is also firmly on the map as a strong buy-to-let spot,’ Garcha continued.[1]

Concluding, Garcha noted: ‘It could be time for landlords to turn their attention away from pricey London and look to the UK’s regional cities.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/britains-highest-yields-the-best-areas-for-buy-to-let

Foreign Investors Snapping Up Rental Properties in the North West

Published On: February 9, 2017 at 11:04 am

Author: Em Morley

Categories: Property News

Tags: foreign investors,North West,property investment,property investors,rental properties,rental yields

Foreign investors are snapping up rental properties in the North West of England, according to new research from The Mistoria Group, a specialist in high-yielding property investment.

Foreign Investors Snapping Up Rental Properties in the North West

The firm believes that foreign investors are taking advantage of the weak pound, high yields and excellent occupancy rates in the region’s university towns and cities.

The study found that there has been a surge in foreign investors purchasing student properties in Liverpool and Salford, up by 42% year-on-year. The vast majority of investors are from China and Hong Kong, followed by the UAE, Russia and Singapore.

Chinese buyers are especially keen on apartments and Houses in Multiple Occupation (HMOs), says The Mistoria Group, many of which have high rental yields. The Government’s ambition to create a Northern Powerhouse is also helping to drive foreign investors to the North West, the firm believes.

Mish Liyanage, the Managing Director of The Mistoria Group, comments: “The Brexit vote reduction in the value of sterling against the dollar and the yuan has boosted Chinese investment in the likes of Salford and Liverpool.

“The Chinese are not alone in their enthusiasm for newly-affordable UK bricks and mortar. The Brexit effect means that British property is 20% cheaper for many foreign investors, and there are no signs that this is likely to be reversed in the near future.”

He continues: “Many foreign investors buy student accommodation in the North West for their children who are studying at university. Indeed, foreign investors need to look no further than Salford and Liverpool for great investment opportunities, with yields far exceeding those found in London and the South East. Investors enjoy lower property prices and minimal void periods in many towns and cities in the North West. Both in Salford and Liverpool, we have already achieved over 80% occupancy for 2017/18 academic year with more than six months still left in this year to fill up the rest of the rooms.

“Last year, we were only at 55% at this time of the year. This clearly shows the keen interest students show in going for high quality refurbished properties, managed by a reputed student management company.”

He concludes: “Both Salford and Liverpool are undergoing a significant redevelopment, and this is providing jobs and boosting tenant demand. Investors can acquire a high quality three-bed HMO which will house four students from £120,000 onwards. The return on investment is very attractive too, with 13% (8% cash rental and 5% capital growth).”

More landlords are favouring HMO conversions

Published On: January 16, 2017 at 11:17 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,HMO's,rental yields,tax

An interesting new report has revealed that a record number of buy-to-let landlords are converting their properties into HMOs. This is a direct result of the tax changes coming into force from April and has seen landlords try to increase their rental income.

Roma Finance said that they funded more conversion cases of this type during 2016 than in any other year.

Yields

The firm said that the rise in HMO conversions is due to the potential increase of yields from the larger property. In addition, they present a larger opportunity to rent more rooms out to tenants in towns and cities, particularly in areas with a large student and young professional population.

Despite this, the turnover of tenants in is usually higher in HMOs, while they normally require more work than single buy-to-let properties.

More landlords are favouring HMO conversions

Scott Marshall, managing director of Roma Finance, observed: ‘Recent Government policy has put the spotlight on the buy to let market and landlords have acted quickly to mitigate any negative effects on their income. Many want to retain property but maximise income and we have worked with many landlords to fund conversions to HMOs. One landlord we worked with calculated that in one of their properties they could rent out five rooms, vastly increasing income and yield, for just a £30,000 conversion cost. The increased rental income would cover the cost of the loan over twelve months. In this case it made a lot of sense to carry out the conversion.’[1]

‘Converting a single occupancy buy to let to HMO is one option for landlords and we have a number of cases already in the pipeline which will be funded in the coming weeks,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-ditching-buy-to-let-for-hmos.html

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Published On: January 12, 2017 at 9:28 am

Author: Em Morley

Categories: Property News

Tags: landlord taxes,rent prices,rental yields,rents,tax changes

Asking rents will rise by 4% outside London this year, according to Rightmove.

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Last year, the property portal reports that asking rents increased by 3% outside London, but dropped by 4.4% within the capital.

The highest growth in rental prices of the year was recorded in the northern regions of Yorkshire and the Humber and the North West. However, all regions outside London saw a rise.

In inner London, rents fell by 5.2%, while there was a smaller decline of 2.5% in outer London.

The Head of Lettings at Rightmove, Sam Mitchell, considers the future of the rental market: “This year will be one of caution for buy-to-let investors, due to tighter lending criteria and increased Stamp Duty.

“We definitely won’t see the spike in Q1 purchases that we saw last year, as landlords rushed to buy before last April’s new Stamp Duty deadline.”

He also assesses how further changes will affect the sector: “If the tax changes being phased in from this April lead to even fewer buy-to-let purchases and some landlords deciding to sell, then a tightening of supply in some areas will lead to increasing rents.

“We forecast that asking rents could rise by 4% outside London by the end of 2017, though in London, prices are likely to stay flat.”

Mitchell advises landlords on the best locations to invest: “Investors looking for the strongest yields could consider investing in certain areas in the North West, where both demand and yields are high.

“Those with a number of properties in the capital may find that tenants are more price sensitive, so setting realistic rent levels will be the key to avoiding void periods.

“In order to mitigate this, we would recommend landlords asking for longer tenancies to help secure a steady rental income over the next few years while they adjust to what the tax changes will mean for them.”

While recent reports claim that rental yields are expected to drop below the five-year average this year, landlords should be aware that strong returns are still possible in some locations.

Rental Yields to Fall Below Five-Year Average This Year

Published On: January 11, 2017 at 10:44 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let returns,property investors,rent prices,rental yields

Rental yields will fall below the five-year average of 13% this year, warns estate agent Carter Jonas.

Rental Yields to Fall Below Five-Year Average This Year

However, the research arm of the agent insists that rental yields will be sustained in 2017 by a reduction in housing supply and moderate house price growth. It predicts total returns of 5.6% for the year.

Darren Yates, Head of Research at Carter Jonas, reports that the property market has been affected by Stamp Duty changes that have reduced the appetite of smaller investors in particular, with many anticipating higher tax bills as the phased removal of mortgage interest tax relief begins in April.

He says: “With weaker capital value appreciation forecast over the coming year, investors are likely to adopt a more income focused approach to residential property. By focusing on areas that benefit from a balance of strong rental yields and growing local economies, investors can ensure good returns.”

Yates predicts that while Brexit negotiations are likely to dominate the political and economic landscape for the foreseeable future, the UK property market is coming to the natural end of a long growth cycle that has also contributed to lower forecasts for rental yields.

He insists: “Total returns are forecast to moderate across the board, but property remains an attractive proposition for many investors compared with other asset classes over the medium to long-term.

“Property yields continue to offer a significant margin over bonds and equities, as well as delivering a stable income with the ability to add value through proactive asset management.”

Yates’ warning concerning rental yields arrives as HomeLet reports a slowdown in rental inflation. The firm expects rent prices to hit an affordability ceiling in the near future, with warnings of tenants struggling to pay higher prices.

Although rent prices are still increasing and are due to surge following a series of measures affecting landlords’ finances, notably the reduction in mortgage interest tax relief, it seems that yields will not remain so strong.