Posts with tag: rental yields

Rents Rise Across England and Wales, with just London Recording a Fall

Published On: October 25, 2018 at 9:21 am

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The average rent price across England and Wales increased by 2.3% in the 12 months to September, hitting £861 per month, according to Your Move.

Rents rose in all regions of England and Wales in September, except in London, where prices have fallen by an average of 1.3% over the year.

But, unsurprisingly, the capital remains the most expensive place to rent a property in the country, at an average of £1,271 per month, the estate agent reports.

The new academic year caused a surge of activity in September, helping to support growth in rent prices.

The highest annual increase was seen in the South West, at an average of 4.3%, to reach £686 per month.

The next fastest rise was in the East Midlands, at 2.4%, to an average price of £656, followed by the South East, at 1.8%, to £895.

Martyn Alderton, the National Lettings Director at Your Move, comments: “Students up and down the country are beginning to return to their universities. Yet, far from the outdated stereotypes of ropey student digs, many young people are able to access top quality student accommodation in their place of study.

“The growth of the student rental market has been a boon for landlords who have invested in good quality properties. Yet the number of living options for students means that there is real competition, with landlords having to ensure quality is high to attract the best tenants.”

Properties in northern regions continue to earn higher rental yields than those located in southern areas.

The average landlord in the North East, for instance, enjoyed an annual yield of 5.0% in the year to September, while, in the North West, this figure was 4.8%.

Landlords in London once again experienced the lowest annual returns, at an average of 3.2%.

Across all of England and Wales, landlords enjoyed an average rental yield of 4.4% in September – the same as in June, July and August, but below the 4.7% achieved in Scotland.

London Letting Agent Records Busiest Quarter in History in Q3

Published On: October 24, 2018 at 9:25 am

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Does Section 24 Mean You Should Sell Your Property?

A London letting agent has recorded its busiest quarter in history in the third quarter (Q3) of 2018.

Benham and Reeves saw a significant increase in tenant demand for rental properties in London in Q3, according to its latest lettings report.

New data shows that the letting agent experienced its busiest quarter in history in Q3 2018, with more than 1,000 new tenancies agreed across its 16 London branches over this period. This represents a 22.1% increase in transaction volumes on the same period last year.

The report also reveals that Benham and Reeves had an average of 22 applications registered per available property in Q3, which is up from 16 a year ago. This could form part of the reason for expectations of strong growth in rent prices in the capital moving forward.

But, for now, the letting agent claims that rent prices in London are, for the most part, “flat”, despite the recent hike in tenant demand and lettings transactions.

However, Benham and Reeves adds that it “sees this trend [in rent prices] changing in the next 12 months”, suggesting that values are likely to start going up on the back of high demand for rental accommodation in the capital.

The agent concludes: “From small units to large, from new build apartments to period, basement properties, demand has been high across the board, and at every price point.”

Following a period of declining prices across both the sales and lettings markets in the capital, could London be back on the right track with positive price growth over the end of the year and into 2019?

Earlier this year, Hometrack reported that house price growth was already on the mend in the capital. According to Benham and Reeves’ latest report, it seems that rent price growth may also move into positive territory in the near future.

If you’re a property investor in the capital, this should come as some good news!

The UK’s Top Buy-to-Let Hotspot has been Revealed

Published On: October 12, 2018 at 8:15 am

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Mortgage broker Private Finance has revealed which town or city takes the crown as the UK’s top buy-to-let hotspot in October…

New analysis by the broker has named Southend-on-Sea as the UK’s top buy-to-let hotspot, offering an average rental yield of 6.6% once mortgage costs are taken into account.

With an average annual rental income of £23,280, landlords in Southend-on-Sea enjoy a lucrative return for a relatively small upfront investment, with house prices in the area only slightly higher than the national average (£279,358, compared to £231,000).

While a seaside town takes the UK’s top buy-to-let hotspot, UK cities dominate the rest of the top ten. Nottingham came in in second place, while Edinburgh, Greater Manchester, Liverpool, and the London boroughs of Westminster, Tower Hamlets and Camden all enjoy some of the UK’s highest net yields. Home to significant populations of university students and young professionals, these urban locations have high tenant demand, which helps to bolster rent prices.

The UK’s top buy-to-let hotspot

Location Average house price Average monthly rent price Average rental yield
Southend-on-Sea £279,358 £1,940 6.6%
Nottingham £137,835 £928 6.4%
Westminster £970,990 £5,554 5.1%
Edinburgh £254,170 £1,410 4.9%
Greater Manchester £167,928 £911 4.8%
Liverpool £136,521 £725 4.6%
Tower Hamlets £473,327 £2,447 4.5%
Camden £810,708 £4,178 4.5%
Coventry £185,990 £952 4.4%
Southampton £212,155 £1,045 4.2%

Shaun Church, the Director of Private Finance, comments on the report: “Southend is a popular spot for renters, with all the benefits of living in a popular seaside town less than an hour’s commute from central London, and with good airport connections.

“With the high cost of renting pricing many out of the city, towns in a commutable distance from London that offer a more relaxed lifestyle at an affordable price are becoming increasingly popular among young professionals. Rental demand is likely to grow in these pockets outside of London, offering good opportunities for buy-to-let investors.”

House prices as influential as rental income 

The UK's Top Buy-to-Let Hotspot has been Revealed

The UK’s Top Buy-to-Let Hotspot has been Revealed

The analysis, which calculates rental yields in the 50 UK towns and cities with the highest proportion of private rental housing stock, highlights that house prices and mortgage costs can be just as influential as rental income when assessing the best locations to invest in.

While four out of ten areas with the highest rental yields also have some of the highest house prices (Westminster, Camden, Tower Hamlets and Southend-on-Sea), an equal number of areas with the lowest house prices also feature in the top ten list.

Liverpool, Nottingham, Greater Manchester and Coventry all feature in the top ten and benefit from some of the lowest house prices in the UK, suggesting that buy-to-let investors should not only consider potential rental income when assessing where to invest.

This is also encouraging news for hopeful investors with smaller sums to invest with, demonstrating that you don’t need to spend millions to secure a lucrative property investment.

Buy-to-let mortgage rates at near record lows

While landlords have been hit by a raft of tax changes, including higher rates of Stamp Duty and restricted mortgage interest tax relief, buy-to-let mortgage rates have been gradually falling, with lenders introducing lower rates in a bid to galvanise the market.

Bank of England data shows that the average buy-to-let mortgage rate in September (2.31%) was close to its most affordable level (2.27% in August 2018) since the statistics were first published in 2012. This helps to improve the profitability of buy-to-let investments across the UK.

Based on a 75% loan-to-value mortgage against the average UK house price, landlords’ typical interest-only repayments have dropped by 54% since 2012, from £733 per month to £334, meaning that those who have remortgaged onto today’s competitive rates could be set to enjoy an annual saving of £4,788 compared to six years ago.

Church continues: “While recent Stamp Duty changes in the sector may have dampened landlords’ appetite, our analysis shows buy-to-let still remains a viable and lucrative investment. Strong rental incomes, matched with declining mortgage costs, mean that landlords can still enjoy a level of return on their investment they’d be hard pressed to find elsewhere.

“When considering a buy-to-let investment, location is often the most important factor determining the yields investors enjoy. While investors may be wooed by the prospect of strong rental income, house prices can be just as influential in determining rental yield. Looking for areas with opportunities for house price growth can also provide landlords with the added benefit of a profit from the eventual sale of their property, in addition to a regular monthly rental income.”

He concludes: “Whether it’s through a limited company or a personal purchase, there are a number of ways to buy a buy-to-let property, all of which have varying financial implications, such as tax. There’s no one-size-fits-all approach to purchasing buy-to-let. Enlisting the advice of an independent mortgage broker will help ensure your investment is as profitable as possible.”

Liverpool is Ideal for BTL Investors Looking for ‘Lucrative Long-Term Rental Returns’

Published On: October 5, 2018 at 9:00 am

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Liverpool has once again been highlighted as an ideal destination for buy-to-let landlords seeking solid rental returns, this time by an experienced property investment specialist.

The city continues to see high demand from tenants for private rented accommodation, thanks in part to ‘Knowledge Quarter’, which has seen a huge influx of students and young business professionals choosing to relocate to the city due to the new and innovative opportunities available.

Mark Burns, managing director of property investment firm Hopwood House, said: “Not only does the city’s beautiful waterfront setting and impressive skyline attract major international interest, the city was also awarded the title of one of the best places in the UK to invest, making it the perfect opportunity for buy-to-let property investment.”

Burns points out that with unparalleled earnings to house price ratio, properties in this high-spirited and fast-paced city cost on average 4.8 times more than the typical annual salary.

“Nominated as the annual European Capital of Culture in 2008, Liverpool possesses all the attractive qualities of larger UK cities at a fraction of the price,” he added.

Property prices in Liverpool are relatively affordable compared with other major UK cities, and with an average house price growth of 5.9% last year, Burns sees Liverpool as “the ideal location for buy-to-let property investors looking for lucrative long-term rental returns”.

He continued: “Liverpool offers some of the most profitable rental yield returns in the country, with three Liverpool postcodes ranking in the top 10.
“The L7 area of Liverpool, located just outside the busy and energetic city centre, offers unrivalled yields of up to 11.79%. Areas elsewhere in Liverpool can offer rental yields anywhere between 11.52% and 9.36%.”

Plans for the Northern Powerhouse scheme, designed to rival London and the South East as the main driver of economic growth in the country, by pooling the strengths of the cities and towns of the north as one cohesive unit, are also expected to support the housing market in Liverpool as well as boost the wider economy in the city.

Burns went on: “Liverpool is set to benefit from 10,000 new properties and two million square-feet of office space due to the redevelopment proposals set out by the city council.

“The new office space available is expected to attract a substantial number of young business professionals to the area while the new properties available are a perfect opportunity for investors looking to enjoy long term rental returns.

“Liverpool is most certainly one of the most beneficial and profitable places for property investment at the moment, especially in the buy-to-let sector. Cheap house prices and attractive yields allow investors to enjoy long term lucrative returns whilst the growing population of young professionals and the number of properties available on the market make it a straightforward investment with fewer risks than investing in other larger UK cities.

“The Northern Powerhouse initiative and the city’s extensive transport networks make it both refined and accessible for both tourists and locals.

“Liverpool is set to continue growing and thriving in years to come, making it an ideal investment opportunity for investors looking to expand their property portfolio.”

Stabilising Rental Yields Could Cause London House Prices to Balance

Published On: October 2, 2018 at 9:54 am

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International buyers have been purchasing a high proportion of London property in PCL

As rental yields in the capital look to stabilise, the slide in the value of homes in Greater London is expected to come to a halt as early as autumn 2020, according to the latest analysis by Home.co.uk.

The company’s data suggests that house prices look set to stabilise in the capital within two years, due to improving rental yields.

Home’s Doug Shephard explains: “During London’s recent property boom, house prices soared ahead of rents. Investment fever drove prices up more than 50% in just five years. Meanwhile, rents rose only 10% over the same time period, causing yields to collapse.”

Stabilising Rental Yields Could Cause London House Prices to Balance

Stabilising Rental Yields Could Cause London House Prices to Balance

Rental yields fundamentally underpin house prices and, following a long period of decline, the tide has turned. Sliding property values, combined with rapidly rising rent prices, are driving yields back up in the capital.

The average house price in London has fallen by around 2.3% over the past year, while rents have jumped by 4.3%. Moreover, rent price hikes are accelerating due to a scarcity of rental accommodation. Overall, the number of available properties to let in Greater London has dropped by around 14%, but, if we filter out the unlettable properties that have been hanging around for more than 20 weeks on the market, the decline is more like 27%.

Low rental yields, sliding capital values, higher taxation and more regulations have all served to disincentivise investors from purchasing more properties. In fact, this combination of factors has been encouraging many landlords to leave the rental sector altogether, hence the decrease in available properties to let, caused by a steep fall in supply of 21% over the last 12 months.

At present, the average gross rental yield in London of 3.7% remains too low to be attractive, and returns in prime central locations are even worse, making buying a property to let far more lucrative in other UK regions.

Across England and Wales, the average rental yield in August was 4.7%, while, in Leeds, for instance, the typical return is a far more attractive 6.0%.

Looking at the counter trends of sliding prices and surging rents in London, Home estimates that rental yields could reach as high as 6.0% in the capital by the end of 2020; sufficiently attractive returns to trigger substantial reinvestment, thereby stabilising house prices.

Shephard poses the question: “How long will London prices keep falling? This is a key question for the UK market as a whole, as history tells us that what happens first in London happens later to the rest of the regions.

“The answer may be quite simple: when rental yields return to attractive levels. For that to happen, either prices must come down, or rents must rise, or both. In fact, the current trends show both processes are occurring already, but slowly.”

He adds: “We expect some significant rent hikes over the next two years, as tenants compete to secure a home in the capital, and this will accelerate the rise in yields. Sufficient yield recovery will prompt landlords to invest once more in London’s vital private rented sector, although, should rent controls be imposed, they will almost certainly stay away.”

How Can you Improve Outdoor Space in Your Property to Increase Rental Yield?

Published On: September 24, 2018 at 10:01 am

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A garden is more than just a garden. It’s a place where families and friends come together and quality time is spent, especially in this summer period…

For property investors, garden and outdoor space is a desirable feature to a property. Tenants often place this feature as a necessity when searching for the perfect home, this is an enabler for you to demand a higher rental price and, as a result, increase your rental yield.

If you’re preparing to sell your rental property or are seeking the most effective ways to increase your rental yield, Just Landlords, the specialist landlord insurer, have compiled some top tips for you to follow.

Lawns

Having a large lawn can be an attractive feature of a property. It can be particularly appealing to families with small children, as they are free to play and run around. In addition, any playing apparatus like swings, slides etc can be used in the garden due to this space being provided.

However, this may not be as appealing if you are an owner of a smaller property. Instead, this type of property will most likely attract young professionals or young couples without children. Despite this, you may want to contemplate keeping some of the lawn and perhaps implementing some decking or a smart patio, perfect for hosting dinner parties or other gatherings. This provides the potential tenant with some optionality and could therefore potentially contribute value to both the sale and rental price.

First impressions

During the viewing process, it is important to wow your potential tenants to increase the chances of them wanting to invest. This is why it is paramount for you to invest in the appearance of your garden, ensuring that the basic cleanliness and tidiness of the space is regularly maintained. This also involves making sure that old plants are replaced with new ones to retain a fresh and inviting atmosphere.

Killing weeds is also important, as you do not want to give potential tenants the impression that your property is unkempt. Additionally, they may feel put off by this because they might have to do a lot of work to keep weeds from growing. One of the most unpleasant weeds is Japanese Knotweed, which can grow to 7ft. For an informative guide on how to get rid of Japanese Knotweed, Landlord News, a company in association with Just Landlords, has written up a thorough guide which you can access here

If you wanted to go the extra mile, you may consider purchasing some exotic plants or some nice garden furniture to really show the potential of the property.

Front garden

Although most tenants are interested in the appearance, space and condition of the back garden, when utilised effectively and presented in a pleasant way, the front garden can add considerable value to your rental property.

Going Solar

Another popular suggestion is to go solar with your garden lights. Though this could be slightly on the pricey side, it would definitely increase your chances of an attractive rental yield, as you would be able to up your rental price.

Throw in some extras

If you are determined to increase your rental yield, then perhaps consider going to extra mile for potential tenants and providing things like a dishwasher or perhaps other desirable appliances. This way, you can up your rental price and improve your rental yield.
So, if you’re determined to improve your rental yield and show potential tenants what your property offers, get busy!