Posts with tag: rental yields

Could night tube boost rental growth in outer London?

Published On: August 16, 2016 at 9:59 am

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The new 24-hour tube service in the capital is launched this coming Friday (19th August). Experts are predicting that the changes could have a positive impact on rental yields for buy-to-let investors in areas subjected to the changes.

Night tube

Commencing on Friday, the new night tube will serve the Central and Victoria lines. Services on the Jubilee, Northern and Piccadilly lines will follow in the Autumn.

Reacting to the move, the Association of Residential Letting Agents (ARLA) said that the new service could provide many people with the confidence to move further out of London. As such, the rental market could receive a timely boost.

Around one-quarter of ARLA members living in London and the South East said they expected to see rental increases around tube stations running a round-the-clock service.

Could night tube boost rental growth in outer London?

Could night tube boost rental growth in outer London?

Desirable

A number of letting agents believe that these regions could become more desirable for tenants, with landlords benefitting from a rise in demand.

Nik Madan, president of the Association of Residential Letting Agents, noted, ‘many Londoners will be rejoicing to see the 24-hour tube finally coming into action. It will mean less time spent on late night buses for those living in Epping or Walthamstow and will make the prospect of living further out of London more attractive-especially as rent costs continue to rise in the centre.’[1]

‘Transport links are a major player in influencing demand and in turn rent costs, so as end-of-the-line areas become connected, there’s a chance we’ll see prices rise,’ he added.[1]

Crossrail

Onlookers are expecting a similar impact on property as experienced by the Crossrail services. Slough and Reading, both served by the new scheme, have seen house prices increase by 39% and 33% since the project was announced back in 2014.

Average regional increases total 22%.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/8/night-tube-could-spark-rental-growth-in-outer-london

Rental Yields of 8%+ Still Possible in London

Published On: August 10, 2016 at 11:07 am

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Although soaring house prices in London make it difficult for landlords to achieve high rental yields, London estate agent Portico has found that returns of 8%+ are still possible in the capital.

The agent has used its innovative Interactive Yield Map to analyse each London borough on a street level to find the highest potential yields for landlords.

Rental Yields of 8%+ Still Possible in London

Rental Yields of 8%+ Still Possible in London

The data found that the highest rental yield, of 8.3%, was found in the borough of Havering, in the Romford postcode area around Whybridge Junior School. The average monthly rent price for a two-bedroom flat in the area is just £1,156, which is £600 less than the average monthly rent of £1,756 across the capital as a whole.

Portico found that outer London boroughs offer the highest yields generally, with areas within Barking and Dagenham, Bexley, Redbridge and Bromley all offering yields of 6% or over.

The suburban district of Chadwell Heath in Barking and Dagenham – where the Crossrail service is set to launch in 2019 – offers landlords an impressive yield of 7.6%. Here, landlords can expect to charge a monthly rent price of £1,278.

In inner London, the strongest rental returns and most affordable monthly rent can be found in Greenwich. On the Pelton Road, Bellot Street, Blackwall Lane, Armitage Road and Millennium Way roads around north Greenwich station, landlords can expect a 6% yields with an average monthly rent of £1,477.

If you are thinking of investing in prime central London, however, yields range from 2-4%. The highest, 4.8%, can be found on the northern end of Finchley Road in Westminster, while the area around the World’s End Estate in Kensington and Chelsea offers a 3.8% return.

The Managing Director of Portico, Robert Nichols, comments: “The rental market has remained strong post-Brexit, but landlords still need to be smart about where they are investing, as a very small difference in yield can determine whether they make a profit or a loss.

“If you’re thinking of buying to let, transport links are key. London’s commuting tenants want to be within close proximity of a Tube, so look for properties near new developments such as Crossrail and Crossrail 2.”

He suggests: “Havering, Barking and Dagenham, and Bexley, which will soon have stations on the eastern edge of the Elizabeth Line, are clearly key investment hotspots where landlords are achieving extremely impressive yields.”

Landlords, will you take advantage of the high rental yields still on offer in the capital?

London’s Rental Market Remains Strong Post-Brexit

Published On: July 29, 2016 at 10:36 am

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It’s good news for landlords, as the latest post-Brexit figures show that London’s rental market has remained strong following the shock vote last month.

Rent prices across the capital have remained steady in the period from May to July, according to data from London estate agent Portico.

Interestingly, prime central London has experienced a post-Brexit boost; Kensington and Chelsea saw a monthly rental average increase from May to July of 0.4% and Westminster also saw a 1.7% rental increase. The trendy east London borough of Tower Hamlets also saw a healthy 1.2% rental price increase from May to July, and savvy investors are still keen to snap up properties in hotspot areas created by infrastructure projects like Crossrail and Crossrail 2.

Portico has also detailed the top buy-to-let hotspots in the new Crossrail 2 zone: https://www.justlandlords.co.uk/news/crossrail-2-coming-london-invest-along-line/

The firm has created a graph using its latest rental data that shows the average rent price for a two-bedroom property in each London borough. It has also calculated the highest potential yield in each area, so that you can see where you will get the greatest return on investment.

London's Rental Market Remains Strong Post-Brexit

London’s Rental Market Remains Strong Post-Brexit

Outer London boroughs

On the whole, outer London boroughs offer the highest rental yields, but the lowest average monthly rent prices. The highest yield of 8.3% can be found in Havering, in the popular but affordable Hornbridge area.

Barking and Dagenham, Bexley, Redbridge and Bromley also offer extremely strong yields, generally over 6%.

Portico has witnessed an increasing number of London tenants moving further out of the capital, particularly further east, to get more for their money. The desirable, suburban area of Chadwell Heath in Barking and Dagenham offers an impressive 7.6% yield, and its popularity is set to rise further when Crossrail arrives.

The agency also expects Romford, Manor Park, Ilford and Forest Gate to benefit hugely from the Crossrail project. Tenants in these areas will be able to enjoy affordable rent prices and a quick commute into London, with landlords able to enjoy both high rental yields and the possibility of strong capital growth.

Inner London boroughs 

If you are seeking high yields in inner London, the boroughs of Greenwich, Southwark and Tower Hamlets all offer healthy prospects. Southwark has surged in popularity over the past year, thanks to extensive regeneration around the Shard and infrastructure improvements in the area. However, it is still one of the most affordable inner London boroughs. The highest yield in the borough, 5.5%, can be found in Peckham.

As for Greenwich, the area around North Greenwich station offers a high 6% yield. In Tower Hamlets, landlords can make the highest rental yields, of 4.8%, near the Canary Wharf Tube station, which will be the first Crossrail station to be constructed, and in the trendy but affordable Whitechapel, at 5.2%.

Prime central London

Although rent prices in prime central London have had a boost post-Brexit, yields in these locations are relatively low. However, a healthy 4.8% yield can still be found in Westminster, in the desirable St. John’s Wood area.

In Kensington and Chelsea, the highest yields, of 3.8%, can be found around the towering World’s End Estate.

If you have been waiting to purchase a rental property post-Brexit, these figures will help you decide where is best for you to invest in London’s rental market.

HMO yields greater than other rental property types

Published On: July 13, 2016 at 8:57 am

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The most recent report from Mortgages for Businesses shows that HMO’s are outperforming all other types of rental property in terms of yields.

Average yields on a HMO stand at just below 10% since 2011.

Rising product numbers

Buy-to-let products have risen during the second quarter of the year, in comparison to the first, albeit more slowly. Products increased by an average of 75 in quarter two, compared to 142 in the first three months of the year.

This slower rise during the second quarter can be attributed to lenders creating separate offerings, with more stringent stress test calculations for borrowers.

Remortgaging followed a similar trend and house purchase activity slid to levels seen in 2015. This was due to the surge in investment transactions before the Stamp Duty deadline.

LTV increases

Average LTV values of HMOs also increased quarter-on-quarter, from 62% in Q1 to 75% in Q2. When data from the last five years is analysed, LTV’s on HMO’s have remained steady, averaging 69%.

LTV’s on vanilla buy-to-lets have also stayed consistent, averaging 67% during the same period.

However, LTV’s for multi-units and semi-commercial property have seen a more up and down few years. The average LTV of a multi-unit stood at only 56% in quarter two of this year, in comparison to an average of 64% in the last five years. Average LTV’s for semi-commercial property was 60% in the second quarter of the year.

HMO yields greater than other rental property types

HMO yields greater than other rental property types

Consistent yields

David Whittaker, managing director of Mortgages for Business, said, ‘we now have five years’ worth of data against which investors can benchmark their portfolios. Both Vanilla BTL and HMO property offer fairly consistent yields. Fort the more cautious investor and for those who like a mix of risk within their portfolio, 6.1% average yield on a standard BTL still represents a good return. And for the more experienced investor, HMOs certainly perform better than all other types of rental property averaging just below 10% since 2011.’[1]

‘Average yields on multi-units grew to a very positive 9.5%, well above the five-year average of 7.4% demonstrating that landlords can often achieve greater yields by taking on more complex property types. Semi-commercial property performed less well than expected considering these buildings are not subject to the residential stamp duty surcharge. Going forward it will be interesting to see whether any trends develop as more investors are expected to move into this niche,’ Whittaker added.[1]

[1] http://www.propertyreporter.co.uk/landlords/hmos-outperforming-all-other-types-of-rental-property.html

Could the North offer best post-Brexit yields?

Published On: July 6, 2016 at 8:59 am

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A new report has indicated that following the historic Brexit vote in the EU referendum, buy-to-let investors should look to invest in Northern locations, rather than the capital.

Research conducted by Assetz Property suggests that landlords could receive greater returns by investing in the property market in the North of England.

Rental yields

Buy-to-let landlords purchasing through Assetz Property can achieve yields of 8.5% in Leeds through their investment properties. Gross yields in London currently stand at only 3.5%.

Disposable income levels in Leeds are also way above those seen in the capital. The typical London salary is currently £40,087, meaning renters are left with an average of just £6,607 of disposable income. This is before features such as bills, food and travel expenses have been sorted out.

In Yorkshire however, despite the average yearly salary standing at over £10,000 less than in London, typical rent is just £11,244 per year.

Could the North offer best post-Brexit yields?

Could the North offer best post-Brexit yields?

Reliable returns

Stuart Law, CEO at Assetz Property, notes, ‘with house prices in London set to drop and interest rates due to fall on savings following Mark Carney’s strong indication of an imminent base rate drop, investors should concentrate on yields and the monthly return on their investment. The potential relocation of thousands or tens of thousands of highly paid city workers to Paris, Frankfurt or Dublin who might have once lived or rented in London can only have a negative effect on the City, while the market in Leeds is likely to be far more stable.’[1]

‘Not only is it a fantastic draw for investors, as properties are, on average, more than £400,000 cheaper here than in London, but it is an ideal location for residents looking to get more for their money and achieve a higher standard of living than they could have in London for a lot less money,’ he add

[1] http://www.propertyreporter.co.uk/landlords/should-investors-shun-london-for-the-north.html

 

 

Interest in HMOs grows amongst landlords

Published On: June 2, 2016 at 9:04 am

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Buy-to-let landlords are more frequently looking to purchase Houses in Multiple Occupation (HMOs) , due to the greater rental yields that they offer, according to a new report.

The investigation by Mortgages for Business also shows that 28% of landlords questioned are thinking of purchasing a HMO. This is a rise of 10% from one year ago.

HMOs interest rising

In addition, the firm shows that the proportion of investors searching for vanilla property-conventional houses and flats which fall within traditional buy-to-let criteria-has slipped from 83% to 79% in the last six months.

What’s more, the introduction of the additional stamp duty surcharge during April has also had an impact on the number of landlords looking to add to their existing portfolios.

November 2015 saw 46% of landlords questioned express an interest in purchasing additional properties. However, by last month, this figure had fallen to 41%.

However, the number of landlords looking to sell their properties has dropped, from 18% six months ago to 14% during May.

Interest in HMOs grows amongst landlords

Interest in HMOs grows amongst landlords

Incorporation

With restrictions on buy-to-let mortgage interest tax relief for higher rate taxpayers coming in next year, more residential landlords have been exploring the possibility of incorporating their portfolios in private limited companies.

Last month, 30% of landlords surveyed said that they owned a property within a limited company, up from 22% at the same period last year.

David Whittaker, managing director of Mortgages for Business, ‘with higher yields it is no surprise that there has been a sizeable shift towards the more complex property types.’[1]

Commercial interest

Mr Whittaker also said that there has been increased interest in commercial and semi-commercial property, with these assets not incurring the 3% stamp duty charge.

‘It is positive to see that fewer landlords are looking to sell property and shrink their portfolios and that a large proportion are still seeing the benefits of remortgaging. After the government’s tax crackdown on private landlords I can understand why investors are being more cautious about expansion. It will be interesting to see how long this cautious approach will last,’ he stated.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/6/landlords-favouring-hmos-to-benefit-from-higher-yields