Posts with tag: rental yields

Best Rental Yields Found in University Towns in the North West

Published On: May 31, 2016 at 8:36 am

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Landlords can find the best rental yields in university towns in the North West, according to a new study by LendInvest.

Although London is a very popular buy-to-let hotspot, the research found that the North West has been the most lucrative area for rental yields in the past five years.

Between 2010-15, Manchester and Liverpool came out on top for rental yields, while the south dominated for capital growth and return on investment.

Best Rental Yields Found in University Towns in the North West

Best Rental Yields Found in University Towns in the North West

The highest average annual rental yields were seen in Manchester at 6.02%, followed by 5.15% in Liverpool. Returns in London are surprisingly low – just 4.86% in outer London and 4.71% in the centre of the capital.

Estate agent Savills reports that the five largest rental markets outside of London are Manchester, Liverpool, Leeds, Bristol and Birmingham – all popular university cities, where an average 23% of the population live in the private rental sector.

Property investor Peter Armistead, of Armistead Property, advises: “Landlords will find the best returns in urban areas with a concentration of students and young professionals. Yields in Houses in Multiple Occupation (HMOs) can be high. If you’re targeting the student or young professionals market, buy a multiple-bedroom property near the university or city. Students and young professionals are looking for high-spec accommodation with good appliances and a quality finish that have good transport links nearby, such as train stations and main roads.

“It is important to remember that yields are calculated before maintenance costs, void periods, mortgage payments and letting agent fees. So before acquiring a rental property, ensure you factor in all these costs.”

He explains: “An average residential property in Manchester is just £155,000, while a flat in good area costs as little as £120,000. A property in Manchester can provide a 5% minimum cash rental yield and a typical 12% total cash yield, including 7% capital appreciation. Demand for rental accommodation is strong and, by comparison with other regions, housing is cheaper.

“House prices in London are about five times what they are in Manchester, but salaries are only 30% higher. Manchester is a very affordable place to live, and demand for property is soaring in the city, thanks to the expansion of the Metrolink tram system, the trendy Northern Quarter and the BBC Media City. It has vibrant restaurants, bars, clubs, plus a great music scene, galleries and museums.”

Armistead concludes: “In the second half of this year, we may start to see a shift in investment focus away from London and towards the more lucrative and profitable buy-to-let areas in the UK. Many investors will be looking at ways to protect potential new investments in 2016 from the impact of the Chancellor’s new tax measures.

“If investors can purchase cheaper properties with better yields, they will have the opportunity to protect and boost their profits in the longer term. Certainly the recent changes have made it a lot harder to make money in buy-to-let. But where there are challenges, there are opportunities if you can think outside the box.”

Will one-bed flats see largest capital gains in 2016?

Published On: May 23, 2016 at 10:46 am

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An interesting new investigation has found that buy-to-let landlords in the UK could see the best capital gains on a one-bedroom flat over the course of the next year.

However, the same survey from Amicus Property Finance found that two-bedroom flats will generate the largest rental yields over the same period.

Gains

25% of British landlords said that one-bedroom flats are to offer the best capital gains in the next twelve months. This was closely followed by student accommodation in towns and cities, with 24%. 22% of residential landlords said that two-bedroom flats would provide the biggest capital gains, with 21% suggesting three-bedroom flats.

In terms of rental yields, 28% of landlords said that two-bedroom flats were likely to be most profitable. 25% said student accommodation in university hotspots would offer the biggest yields, while 21% selected three-bedroom flats. One-bedroom flats (20%) and new build properties (14%) were next most popular.

Will one-bed flats see largest capital gains in 2016?

Will one-bed flats see largest capital gains in 2016?

Winners

John Jenkins, CEO of Amicus, said, ‘the findings show flats are the clear winners over houses and maisonettes for both capital growth and rental yields and this is reflected in our own experience in servicing professional landlords’ short term borrowing requirements.’[1]

‘Despite some uncertainty in the consumer buy-to-let sector as a result of changes to stamp duty charges, we’re seeing a sustained and growing appetite for short-term property finance driven by the tightening of mainstream bank underwriting requirements and the inability of some lenders to act sufficiently quickly to respond to demand,’ Jenkins continued.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlord-tip-1-bed-flats-to-achieve-biggest-capital-gains-over-next-12-months.html

 

Buy-to-let leads other asset classes

Published On: May 12, 2016 at 9:17 am

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Categories: Finance News

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Record-low mortgage lending rates, unshakeable demand from tenants and increasing rental yields have lead many people to turn to buy-to-let investment as a viable means of supplementing their regular income.

Poor returns from banks and building societies have also contributed to a rise in buy-to-let activity.

Performance

Buy-to-let investment continues to outperform all major asset classes. With the population of Britain set to drive demand, rental prices look set to soar even further.

The most recent PPRMI buy-to-let index for Property Partner indicates that residential property continues to thrive as an asset class. Returns on buy-to-let property are continuing to outstrip those generated by shares, bonds and cash investment.

Data from the Index shows total returns from buy-to-let property in England and Wales increased by an average of 9.6% over the last year. This was driven by gains in London, where buy-to-let landlords saw typical yields total 16.5%.

Increases

‘Total returns for residential property crept up to 9.6% in the year to March, as investors rushed to beat April’s stamp duty deadline. This was especially true of London, where annual returns were in double digits, reaching an eye-watering 16.5%. The East was strong too and from firsthand experience the Northern Powerhouse regeneration plan is boosting investment activity in the North West and in particular Manchester.’[1]

Despite the fragile nature of monthly figures, the report indicates clear regional disparities in the housing market. Yorkshire and the Humber and the North East regions in particular are looking extremely fragile.

‘Investors are understandably showing caution ahead of the EU referendum. But the fundamentals-high employment, wage growth, cheap borrowing and the chronic shortage of supply-remain in place and are positive,’ Mr Weaver continued.[1]

Buy-to-let leads other asset classes

Buy-to-let leads other asset classes

Substantial returns

Alternative research conducted late last year by economists at the Wriglesworth Consultancy for lender Landbay indicated that buy-to-let landlords have gained returns of around 1,400% since 1996.

This figure is significantly greater than other mainstream investments, such as shares, bonds and monetary transactions. With existing poor supply of housing failing to quell demand, present signs indicate that this growth will continue.

Additional data from HomeLet shows that typical rents in the UK outside of London stand at £764 per month, a rise of 5.1% year-on-year. The investigation found that rents rose in 11 out of the 12 regions of Britain annually in the three months to April 2016. The North West of England was the only region to see a fall, albeit of just 1%.

Martin Totty, chief executive of Barbon Insurance Group, Homelet’s parent company, noted, ‘rental price growth in most areas of the country is unchanged from the trends observed over almost three years.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/buy-to-let-returns-top-all-other-asset-classes

Where to Find the Highest Rental Yields in the UK

Published On: May 10, 2016 at 9:12 am

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With many financial changes affecting the buy-to-let sector, most landlords will be looking to achieve the highest rental yields possible. So where should you invest?

Where to Find the Highest Rental Yields in the UK

Where to Find the Highest Rental Yields in the UK

A buy-to-let investment search portal, Buy2Let, has produced an interactive map based on a selection of data from the Royal Institution of Chartered Surveyors, LSL Property Services, LendInvest, Move With Us, HomeLet and Hamptons International.

The map acts as a guide to which locations in the UK will offer the highest rental yields by 2020.

The figures show gross rental yield and cumulative yield growth between this year and 2020.

Unsurprisingly, Buy2Let believes that yield percentages will be the greatest in the North of England and the Midlands in four years’ time.

For the highest rental yield growth, the firm suggests investing in Liverpool, Manchester, Leeds, York and Birmingham. Alternatively, Sheffield, Nottingham, Leicester, Coventry and Carlisle are set to perform well.

If you are thinking of investing in the south, Buy2Let highlights Reading as a hotspot for rental yields, alongside Cardiff and the surrounding areas.

In London, the greatest rental growth areas are Stratford, Hackney, Whitechapel and Canary Wharf.

At the opposite end of the scale, Plymouth, Great Yarmouth and Bath have some of the lowest average rental yield percentages in England and Wales, despite offering high rental values. If you have rental properties in these areas, it may be worth finding a more lucrative investment further north.

While the figures use a wide range of data to determine the rental yield hotspots, the buy-to-let sector continues to face many changes. Alongside the 3% Stamp Duty surcharge – introduced on 1st April – landlords will face reductions in mortgage interest tax relief from next year.

For details on how these financial changes will affect your business, we have advice from expert Paul Mahoney, of Nova Financial: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

If you are concerned about rental yields on residential property, it may be a good idea to consider commercial units, as many landlords are already doing: /residential-landlords-moving-away-traditional-buy-let/

Many retiree landlords dependant on rental income

Published On: April 15, 2016 at 10:37 am

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A new survey conducted by Responsible Equity Release reveals that a majority of buy-to-let investors of retirement age are reliant on their rental income.

Almost three-quarters of buy-to-let investors over 65 said they would struggle to make ends meet if they did not have their rental income to cover them.

Boosts

According to the survey, 81% of landlords of retiree age stated their rental property provided a much needed boost to their retirement income. Low interest rates are thought to be hitting a lot of retiree landlords hard.

The survey quizzed over 1,000 retirees about their experiences of owning a buy-to-let property. An overwhelming majority of 92% said that they were concerned about changes to mortgage interest tax relief and the potential impact this would have on their rental yields.

In fact, the buy-to-let tax alterations have left a number of landlords considering their future in the sector. 41% said though their buy-to-let investment was a positive source of income, they are seriously thinking about selling up.

Many retiree landlords dependant on rental income

Many retiree landlords dependant on rental income

Life saver

Steve Wilkie, managing director at Responsible Equity Release, said, ‘for many pensioners, having a buy-to-let property has been a life saver in this low interest environment. While their savings have languished, earning very little interest and pension income has been hit hard by falling share prices, property income has remained strong.’[1]

‘Without the income boost from their buy-to-let, many would really be struggling to make ends meet. But the Chancellor has yet again ignored UK’s retirees when he announced changes to the way buy-to-let would be taxed,’ Wilkie continued.[1]

Mr Wilkie went on to say, ‘George Osborne was so focused on taxing the rich, he forgot that a new tax on buy-to-let won’t just hit the wealthy, it will also hit those honest, hard-working people, who may have a single buy-to-let property and were just hoping it would earn them a little extra income in retirement.’[1]

[1] http://www.propertyreporter.co.uk/landlords/majority-of-pensioner-landlords-reliant-on-btl-income.html

The Most Expensive and the Cheapest Places to Rent in the UK

Published On: January 14, 2016 at 3:09 pm

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The Most Expensive and the Cheapest Places to Rent in the UK

The Most Expensive and the Cheapest Places to Rent in the UK

Flat share website EasyRoommate has revealed the most expensive and the cheapest places to rent a double room in the UK.

Tenants in the UK pay an average of £492 per month for a double room, an increase of 13% (£57) on last year, when rent was £435 a month, according to the site.

It’s no surprise that the most expensive place to rent in the UK is London, where a double room costs an average of £700 per month, up 8% on the end of 2014.

Renting in Manchester now costs 7% more than at the end of 2014, with the average rent for a double room now sitting at £393 per month. Rents rose by over 6% in Birmingham, from £358 at the end of 2014 to £381 at the end of last year.

Top ten most expensive places to rent in the UK

Position

Area

Rent per month for a double bedroom

1 London £700
2 Oxford £578
3 Surrey £562
4 Cambridge £543
5 Reading £511
6 Aberdeen £494
7 Edinburgh £450
8 Bournemouth £442
9 York £403
10 Southampton £398

Top ten least expensive places to rent in the UK

Position

Area

Rent per month for a double bedroom

1 Belfast £283
2 Bradford £322
3 Sunderland £326
4 Swansea £327
5 Bolton £329
6 Stoke-on-Trent £332
7 Preston £340
8 Leicester £342
9 Cardiff £345
10 Leeds £355

It may seem that landlords would receive the highest returns in the areas on the top list, but remember; property prices are usually more expensive in these places too, so always work out your potential yield by dividing the annual rent received by the price you paid for the property. This will calculate how much you will make over the year. And wherever you buy an investment property, it is always wise to have rent guarantee insurance in place, in case your tenants default on rent payments.