Posts with tag: rental yields

Short-Term Lets vs. Long-Term Lets

Published On: April 16, 2019 at 9:29 am

Rise in housing waiting lists as landlords sell up or convert to Airbnb lets

By Marc Trup, the Founder and CEO of Arthur Online

In a city that hosts around 15m tourists each year, short-stay rentals are not a new phenomenon for London. However, with the rise of marketing portal Airbnb, there is now a growing number of landlords who are choosing to offer short stay rentals over traditional long-term lets.

A big reason for their increase in popularity is due to short-term lets being able to achieve much higher rental returns for landlords than longer-term lets. On average, short-term lets can bring a massive 30% more in returns than the same property being let on a long-term tenancy. However, unless you have another stable revenue stream, it’s best not to rely on short-term lets as your sole source of income. They can be unpredictable, and, while returns can be greater, there is a risk of actually losing out on income due to the number of void periods.

While there is greater flexibility, through the greater turnover of tenants, there is a bigger chance of things being damaged in the property, and therefore more maintenance issues. If you are looking to get into short letting, be prepared for a more hands-on approach to property management. Responsibilities will include: cleaning, handling check-ins, dealing with general tenant queries and issues, as well as maintenance of the home.

It is also worth noting that the success of short-term lets is heavily dependent on where your property is located. Highly desirable areas, and areas popular with tourists, are much more likely to have success as a short-term rental. If your property isn’t situated in an area which receives a high volume of visitors all year round, there is a risk that you will face long void periods. Rent from short-term lets is not as easily guaranteed as for longer-term tenancies. On top of this, even while your property isn’t occupied, you will still have to pay for the running of the property, e.g. gas/electric bills and insurance costs.

For homeowners who want to make some extra cash from their property during high season, short-term lets are a good way to go. However, for the full-time landlord, a more cautious approach may be more appropriate to help limit the amount of void periods in the property.

It is also possible to try a combination of the two and offer both short and long-term lets. This will enable you to charge higher rent prices during high season and, for the rest of the year, your property will be occupied by a long-term tenant. You will also need to check with your mortgage lender that your policy allows you to take on short, as well as long, term tenancies. Even if you have a buy-to-let mortgage, many lenders require a tenancy agreement to be an Assured Shorthold Tenancyof at least six months.

In spite of their new popularity, short-term lets are unlikely to replace long-term lets anytime soon. Long-term lets offer consistency – a guaranteed income for a set period every month. With long-term lets, you are more likely to get professional tenants who treat your property like a home, instead of holidaymakers who may care less about the condition they leave your property in.

Marc Trup is the Founder and CEO of Arthur Online

After selling his business to BUPA in 1998, Marc started investing in rental properties in London. Over the next 15 years Marc grew his portfolio to over 85 properties. While successful, self-managing his portfolio became increasingly difficult. With technological advances and greater connectivity, he assumed there was software available that would allow him to manage his business from his smart phone, while sipping espresso at the local coffee shop. Following a long search, he found that nothing quite cut the mustard. So being an entrepreneur, he started Arthur Online to make not only his life easier, but also that of other property managers.

Arthur Online is a cloud-based platform that enables property managers to respond instantly and solve problems fast from anywhere in the world, be it with tenants, contractors, property owners or letting agents. Since launching in 2015, it has helped thousands of property managers like Marc run their portfolios in the cheapest, most efficient way possible by using the full potential of new technology and cloud computing. Start your free trial today by going to www.arthuronline.co.uk

So-Called Diamond Buy-to-Let Hotspots Revealed in the North of England

Published On: April 8, 2019 at 9:04 am

Author: Em Morley

Categories: Landlord News

Tags: property investment,rental yields

An investment portal has highlighted so-called diamond buy-to-let hotspots for landlords in 2019 – all of which are located in the north of England.

One & Only Pro has found that property investors can earn more than double the 8% yield currently aimed for by the average landlord, by using data more effectively.

It reports that, if investors identify the best deals in the best buy-to-let locations – rather than looking at the typical return for the whole area – they could secure net yields well in excess of 20%.

One & Only Pro has identified the proportion of diamond property investment opportunities in the UK’s top ten buy-to-let hotspots. The portal categorises investment deals as diamond if they receive a score of ten on the platform.

The top score out of ten means that the opportunity has the highest possible chance of increasing in value. The scores are calculated by One & Only Pro’s unique algorithm, which considers a range of key factors, data and metrics.

According to the data, the UK’s top ten buy-to-let investment hotspots are all located in the north of England, with Darlington, County Durham taking the top spot for the area with the highest proportion of diamond properties, at 22%.

The top five locations with the highest proportion of diamond properties is made up by Bootle, Merseyside (21%), Burnley (21%) and Blackpool (19%), both in Lancashire, and Washington, County Durham (18%).

So-Called Diamond Buy-to-Let Hotspots Revealed in the North of England

One & Only Pro’s study has also revealed the average price of the top ten diamond properties in the selected areas, with Burnley offering the most affordable deals, at an average price of just £37,000, which is highly likely to increase in value.

Other diamond hotspots with low average entry level prices include: Bootle (£53,000), Darlington (£56,000), Grimsby (£56,000) in Lincolnshire, and Sunderland (£63,000) in Tyne and Wear.

When it comes to returns, the top performing area was Liverpool, with an average return on cash investment of 78.2% for one of the top ten diamond properties in the Merseyside city. The return on cash investment is based on buying a property with the best mortgage deal.

Other standout performers for One & Only Pro’s average return on cash investment on diamond properties in the top ten buy-to-let hotspots include: Sunderland (68%), Washington (62%) and Burnley (61%). All of the top ten register an average return on cash investment of more than 35% for their top ten diamond properties.

Henri Sant-Cassia, the CEO of One & Only Pro, says: “It’s shocking that people think buy-to-let is dead or is no longer a good investment, as the real data shows something completely different.

“One & Only Pro can highlight the highest returning properties in the best buy-to-let hotspots in seconds.”

He explains: “As we can see, investors in Liverpool can earn almost 80% return on investment. This figure includes the costs of buildings insurance, a gas safety check, service charges and ground rents, and it is all calculated automatically on our website.

“With this kind of return, savvy investors could have earned their deposit back within two years. In many cases, in the above locations, a property’s mortgage could be cleared from the returns within several years and you’ll then have full ownership over your investment.”

Sant-Cassia believes: “While some people have been delaying decisions due to Brexit, the shrewdest investors could already have earned enough income to purchase their next property.

“Where else could you invest and earn returns like this? What’s more, you have the backing of bricks and mortar, which will always have some kind of intrinsic value. As we know, stock investments could always get wiped out and be worth nothing.”

Rent Price Growth Slows, as Landlords Look Beyond London for Returns

Published On: March 28, 2019 at 9:00 am

Author: Em Morley

Categories: Lettings News

Tags: rent prices,rental yields

Rent price growth slowed to almost zero in February, according to the latest Rental Tracker from Your Move.

The estate agent found that the average rent price in England and Wales increased by just 0.4% in the year to February, to hit £861 per month. This is significantly lower than the 1.4% rate of growth recorded in the previous month.

The South West of England recorded the fastest rent price growth in the 12 months to February, at 4%, taking the typical rent to £703 a month.

This growth was attributed to landlords looking beyond London for higher rental returns, and a boom in tenant demand in cities such as Bristol.

Other beneficiaries of this shift away from London were the West Midlands (3.1%), and Yorkshire and the Humber (2.1%). The average monthly rent in the West Midlands was £636 in February, while Yorkshire’s stood at £588.

Yorkshire is the second cheapest region to rent a property in England and Wales, just ahead of the North East, where the average rent price is £540 per month (up by 1% year-on-year).

Meanwhile, London and the East of England registered a decline in rents in February, taking the average price in the capital to £1,260 per month. Tenants in the East experienced the greatest fall, of 1.8%, taking the typical price to £878 a month.

Your Move also revealed the highest annual rental return in February was found in the North East, at an average of 5.0%. The North West closely followed (4.8%), while investors in London experienced the smallest percentage yields, at an average of just 3.2%.

The returns recorded in each of the ten regions included in the report were the same in February as in January, but the average yield across England and Wales (4.3%) was down from 4.4% in February 2018.

Martyn Alderton, the National Lettings Director at Your Move, comments on the report: “Renters have been drawn to Bristol, not only because of its vibrant arts and cultural scene, but also its strong job prospects. This has been accompanied by a boom in build to rent in the city, which has driven up demand and the average rent across the region.

“Private landlords, meanwhile, have tended to prefer the charms of the north of England, a region where yields are significantly higher than elsewhere.”

He adds: “But returns in all regions have remained steady compared with January, meaning landlords across the country have enjoyed solid yields.”

The Your Move data also shows that tenant rent arrears remained below 10% once again in February, with 9.4% of all tenancies behind on payments. This is up on the 8.8% recorded in January, but is down on December’s 10.5% figure.

Landlords, are you looking beyond London for rental returns? Let us know where you’re interested in!

The Current Best Postcodes for Buy-to-Let Yields Revealed

Published On: March 25, 2019 at 10:30 am

Author: Em Morley

Categories: Landlord News

Tags: property investment,rental yields

Estate agent Benham & Reeves has revealed the current best postcodes across the country and in London for buy-to-let yields.

Despite a number of tax and legislative changes making it harder to make strong buy-to-let yields, there are still pockets of the country where landlords can find decent returns on their properties.

The top postcode is currently L7 in Liverpool, according to the research, where a combination of low house prices – at an average of £105,000 – and a large student population result in strong buy-to-let yields, at an average of 10.7%.

The neighbouring L6 postcode is close behind, where buy-to-let yields currently average 10.4%, while Middlesbrough, Manchester, Bradford, Sunderland, Newcastle, Sheffield and Nottingham are also home to some of the best postcodes for rental returns.

Top ten postcodes for buy-to-let yields

Position	Postcode	Average yield	Average house price
1	L7	10.7%	£105,000
2	L6	10.4%	£85,000
3	TS1	10.2%	£61,000
4	M14	10.2%	£163,000
5	BD1	9.9%	£58,000
6	SR1	9.7%	£68,000
7	L5	9.4%	£69,000
8	NE6	8.5%	£123,000
9	S2	8.5%	£109,000
10	NG7	8.5%	£137,000

Marc von Grundherr, the Director of Benham & Reeves, says: “There are a whole host of factors that mean the rental desirability of a property can literally change from one street to the next, but one of the best starting points to work from is the rental yield available.

“Despite the Government’s attempts to dampen the appetite of the sector, it remains a lucrative business and, for those with the time to commit to it, there are plenty of buy-to-let honey pots out there that will bring a great return on your investment.”

Landlords looking to invest in London will find that the E6 postcode in the east, along with IG11, which is located a little further east covering Barking, top the charts in terms of buy-to-let yields in the capital, both offering an average return of 5.0%.

This eastbound stretch of London actually dominates the top ten, with RM8, RM9 and RM10 also among the most lucrative postcodes in the capital, at an average of 4.9%.

N18, which straddles the North Circular, is one of the only postcodes outside of east London to make the list, with buy-to-let yields averaging 4.8%.

RM13 ranks next, with SE28 the only postcode south of the river to appear. E15 and EN3 complete the top ten.

von Grundherr comments: “Of course, London’s more prime postcodes are always a safe bet, attracting investment due to their prestigious image and positioning. While we may have seen some decline in price growth, due to political uncertainty, they remain very much in demand from a rental point of view and so, for those with the budget to buy there, a return isn’t hard to come by.

“They also offer better capital growth than London’s peripherals and, for those not completely dependent on yield, but preferring to opt for more long-term growth, inner London is still the go to place to invest in the capital’s buy-to-let market.”

Short-Term Lets in Liverpool Offering Yields of Up to 30.7%

Published On: March 20, 2019 at 10:32 am

Author: Em Morley

Categories: Landlord News

Tags: North West,rental yields,short-term lets

Landlords who own properties in Liverpool or Manchester could potentially achieve yields of up to 30.7% on short-term lets, according to Portico Host.

The short-term letting agency has conducted research on short-term lets in the two cities, finding that landlords in Walton, Liverpool are achieving the highest short-term let rental yields, at an average of 30.68%, which compares to 7.88% for those letting longer-term rentals.

Walton is located on the outskirts of Liverpool city centre, and is a diverse and longstanding residential area. House prices here are cheaper than in other Liverpool postcodes, which enables landlords to achieve stronger yields.

The highest long-term rental yield in Liverpool or Manchester can be achieved in Fairfield, Liverpool, at an average of 12.52%.

The short-term lets return is based on an occupancy rate of 60% of the year, which is typical for this type of property, due to seasonal demand.

Of the top ten best performing locations for short-term lets in Liverpool and Manchester, the top five are in Liverpool postcodes L4, L6 and L7.

In Manchester, the highest short-term lets return can be found in Hulme (M15), at an average of 17.4%.

Rachel Dickman, the Regional Manager of Portico Host, says: “It perhaps isn’t surprising to find that the properties that are achieving the greatest returns are those that are situated in areas surrounding Liverpool and Manchester city centres. These places typically have excellent transport links, proximity to popular tourist attractions, employment hubs, and good restaurants and cafes.

“Liverpool is becoming increasingly popular on the tourist trail, with 1.34m people visiting the city in 2018, and with business travellers, students and young professionals. A growing number are wanting to stay in short-term let properties, and the increased demand for this type of accommodation is underpinning the rents that can be achieved.”

There are currently 10,200 active listings in the North West on Airbnb, according to the short-term lets site’s latest insight report. The study also found that Airbnb has brought in almost £37m for the North West’s economy.

Portico’s Emma O’Rourke comments: “Good news also for landlords is that mortgage lenders are waking up to the popularity in short-term lets, although they do remain cautious of the risk it poses to their balance sheets.

“Last year, one lender launched a mortgage aimed specifically at Airbnb hosts, and landlords who want to rent out rooms in their home for short and ad-hoc periods. We expect high street lenders to follow suit with more mortgage products for these types of properties coming to the market, making it easier for people to let a property in the short-term.”

Landlords, does this encourage you to invest in the short-term lets sector?

London Rental Yields Improving as the Market Bottoms Out

Published On: March 1, 2019 at 9:01 am

Author: Em Morley

Categories: Landlord News

Tags: house prices,London,rental yields

London rental yields seem to be improving, as the property market in the capital shows signs of bottoming out, reports estate agent Chestertons.

House prices in the capital have dropped in recent years, with property values in prime London experiencing the sharpest declines. They are now close to 20% below their peak in 2014, according to various indices.

However, there are now fresh signs that the London property market is finally bottoming out, as a substantial rise in people registering to buy homes is coupled with a significant decrease in the number of new properties coming onto the market.

Chestertons has witnessed a 35% increase in the amount of buyers registering to purchase properties in the capital since the start of this year, compared to the corresponding period of 2018.

In addition, the number of agreed sales has risen by 7% year-on-year, while property viewing appointments have increased by 12% over the same period. This further demonstrates the existing strong buyer demand in the market.

But the estate agent reports that the number of new properties coming onto the market during this period in London has fallen by 22% annually, adding to the widening supply-demand imbalance in the market, which has slowed the rate at which house prices have been declining in the capital.

London Rental Yields Improving as the Market Bottoms Out

The latest House Price Indexfrom the Office for National Statistics (ONS) shows that growth in London improved from an average of -1.4% in December 2017 to -0.6% in the same month last year.

Meanwhile, in Zone 1, Chestertons’ own data shows that, in the three months to December 2018, prices in prime locations dropped by an average of 1.2%, which is a considerable improvement on the -2.2% rate recorded in the previous quarter.

As house prices have fallen significantly since 2014 and rents have increased in many parts of the capital, due to a shortage of available rental homes, London rental yields are also picking up and supporting investor demand.

London rental yields in locations covered by Chestertons stood at an average of 3.2% at the end of December last year, compared to 3.0% at the same point in 2017.

In Zone 1, rental returns increased to an average of 2.8%, from 2.7% in the previous year.

Guy Gittins, the Managing Director of Chestertons, says: “Following two years of substantial price drops, the market is now bottoming out in London.

“Property values in the capital – particularly in prime locations – have now come down to a level that is proving increasingly attractive to potential buyers, driving a huge surge in the number of people registering with agents and buying property since January.”

He continues: “At the same time, the number of new properties being put up for sale has plummeted. This dramatic imbalance between supply and demand is starting to fuel small price increases in areas like Hyde Park and Putney, as competition ramps up – and we’re even seeing instances of buyers attempting to gazump others by offering to pay over asking price. The signs of recovery are there, with the prime market leading the way.

“It’s not just local buyers who are coming to the market in their droves now, but investors, too, who are seeing improved yields and good opportunities.”

Gittins adds: “With 29^thMarch looming large in people’s minds, overseas buyers fear their window of opportunity is closing, and are moving fast to invest in the London property market while prices are low and sterling is weak.”