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Oxford best city for buy-to-let investment

Aldermore has named Oxford the best city for buy-to-let investment in the UK.

The city emerged top of 25 analysed in the bank’s Buy to Let City Tracker, with Manchester, Edinburgh, London and Norwich making up the rest of the top five.

Oxford’s biggest selling point for private landlords was that it was one of the largest private sector rental markets in the UK, with 28 per cent of all residents renting privately.

The city’s average monthly rent for a room was £596, it has low levels of vacancy and average property prices have grown at 4.8 per cent a year over the past decade.

The tracker analysed five measures of buy-to-let investment desirability. They were average total rent, best short-term returns through yield, long-term return through house price growth over the past decade, lowest number of vacancies as a proportion of total housing stock, and percentage of population renting.

The five cities ranked lowest on the list were Derby, Sheffield, Bradford, Newcastle and Wolverhampton.

Strong down south
Regionally, the south of England appeared strongest overall, with good long-term investment prospects. Bristol averaged annual house price rises of 4.8 per cent over the ten-year period, the same as Oxford.

The Midlands was revealed to be a mixed market, with Nottingham showing impressive short-term yield of 7.3 per cent.

Yorkshire was less strong overall, with lower average prices per room and below average yields.

“The number of people renting in the UK has grown rapidly, by 1.7 million in 10 years, and private landlords are increasingly a central part of the housing market,” said Damian Thompson, director of mortgages at Aldermore.

“The housing market is made up of multiple small markets with their own conditions and challenges.

“Regulatory changes and persistent economic uncertainty have affected regions differently and landlords need backing and advice from lenders,” Thompson added.

Written by: Liz Bury

Source: Your Money

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Scotland offers the quickest return on buy-to-let investment

Scotland offers the quickest return on buy-to-let investment, London estate and letting agent, Benham and Reeves has found.

Benham and Reeves looked at average house price plus the cost of buy-to-let stamp duty and annual rent and ranked each area on the number of years it would take for this annual rent to recoup the cost of buying in each area and paying stamp duty.

Scotland offers the quickest return, with the annual rent returning the original asking price in 17.7 years. Northern Ireland was the second quickest at 18.9 years, followed by England (25 years) and finally Wales at 26.4 years.

Marc von Grundherr, director of Benham and Reeves, said: “Buy-to-let investment is a complicated business, even more so given the changes to the sector of late, however, the primary indicator of a good investment is always going to be the rental yield available.

“While a buy-to-let investment includes all sorts of additional concerns such as contingency budgets, capital growth and so on, we wanted to highlight on a more digestible level where offers a good investment option when it comes to recouping the cost of that investment via your rental income.

“What this research demonstrates is that while buy-to-let remains a lucrative business despite the government’s attempts, it should be viewed as a long-term one and not a method for making a quick buck.

“For those serious about the sector whether it be as a professional or amateur landlord, it’s important to understand the commitment before diving in if you wish to see a profit.”

In the capital, Tower Hamlets is the best buy-to-let investment for the fastest return, with annual rental income taking 21.4 years to return the average house price and stamp duty costs of £452,821.

Barking and Dagenham (22 years), Newham (23 years), Greenwich (23.5 years) and Enfield (25.7 years) were also amongst some of the best options in the capital.

With Scotland and Northern Ireland home to the quickest return on a top level, it’s no surprise that they account for the top three quickest areas in the UK, with Glasgow the quickest of them all at 13.3 years, followed by Belfast at 15.8 years and Aberdeen at 17.8 years.

Nottingham was the quickest area in England to see rental income recoup the cost of buying a property at 18.4 years, followed by Newcastle at 18.5 years.

By Michael Lloyd 

Source: Mortgage Introducer

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Is buy-to-let investment poised to rebound in 2019?

Could buy-to-let be THE contrarian investment sector to buy into right now? Concerns over the health of the housing market mean that home purchases for rental purposes have basically dried up, while a great many landlords have been selling up amid fears of a property price crash. Fresh data, though, suggests that the market may be about to improve.

A survey of 500 landlords and real estate investors carried out by Experience Invest revealed that 39% of respondents plan to increase the size of their buy-to-let portfolio in 2019. This compares with the 11% who expect to reduce the size of their holdings.

Of the remaining participants, 35% said that they plan to neither buy or sell property this year, while 15% disclosed their intention to sell some existing bricks-and-mortar assets to then reinvest in new properties.

Where are the investing hotspots?

Also surprising was that respondents to Experience Invest’s poll seem to dismiss fears that the London property market in particular is in danger of sinking.

Some 35% of those who said they are intending to buy this year told the property investment specialist that they were intending to buy in London in 2019, putting the capital city in top spot on the list of most popular cities. And as a region Greater London also claimed prime position with 37%.

The North West of England was the second-most popular region on the list, with 30% of real estate investors intending to invest there this year. Manchester and Liverpool, which commanded 33% and 25% of respondents respectively, came in in second and third place respectively in terms of the most attractive cities.

Is landlord appetite recovering?

I can certainly see why many respondents to Experience Invest’s poll would be feeling upbeat right now. Because of the outflow of landlords over the past couple of years, the UK’s already-bulging shortage in rental accommodation has worsened still further, in turn pushing rents ever higher.

Latest data on buy-to-let lending suggests that a recovery in appetite is yet to become apparent, though. According to UK Finance, mortgage products taken out for rental purposes fell 5.6% year-on-year in December to 5,100. Addressing the causes for this decline, Jackie Bennett, director of mortgages at the body to commented that “demand for new buy-to-let purchases continues to be dampened by recent tax and regulatory changes.”

It wouldn’t surprise me one bit if buy-to-let demand continues to languish in 2019. Those cost increases and regulatory hurdles aside, the peril that Brexit poses to the homes market — whether it be in respect of an economically-destructive ‘no deal’ withdrawal, or a prolonged Article 50 extension lasting months or even years — threatens to continue sapping landlord appetite in the near-term and beyond. I certainly don’t believe buy-to-let is an attractive investment class right now; I’d rather put my money to work elsewhere.

By Royston Wild

Source: Yahoo Finance UK

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Buy-to-let remains solid investment

Buy-to-let remains a solid investment with demand for rental housing stronger than ever, Andrew Turner, chief executive at specialist buy-to-let broker Commercial Trust, has argued.

He said that it was inevitable that tax changes, which could potentially suppress profitability in the short-term, would impact upon the perceived desirability of buy-to-let.

Turner said: “The expectation was that this would be most keenly felt by those with fewer properties, because adjusting to the changes would be a more painful process for new investors or those with less experience.

“However, the simple fact is that buy-to-let remains a solid investment option, with strong potential for an attractive and profitable return on capital invested.

“Investors should not be deterred from buy-to-let. Demand for rental housing is stronger than ever, the cost of debt remains relatively cheap and the housing shortage is likely to continue. Even so, any investment decision requires care and expertise.

“Many headlines have focused on one and two property investors who have left the market because they have found it difficult to adjust. The real story has really not been about buy to let becoming unattractive as an investment option.”

Data from UK Finance indicated an evolution in buy-to-let, rather than a mass exodus.

Jackie Bennett, director of mortgages at UK Finance, revealed in November that forecasts for 2018 buy-to-let purchase activity were likely to fall about £3bn short of expectations.

She said: “This is undoubtedly the impact of various tax, regulatory and legislative changes that have happened to landlords in the buy-to-let sector.”

However, Bennett went on to add that buy-to-let remortgaging exceeded forecasts for 2018, with lending likely to reach £27bn, representing a £3bn surplus on what was anticipated.

Turner added: “The market continues to grow and in Q2 2018 increased by 6% over 2017 levels. UK Finance statistics revealed that much of this growth was in remortgages, which grew by 15%, while purchases dipped by about 12%.

“In early August 2018, the Bank of England decided to increase rates by 0.25%. Although there has been limited market reaction so far, I expect to see market rates increase, because margins are wafer thin.

“The Bank of England has said as much itself, with repeated messages that rates are anticipated to rise gradually over the long-term.

“Landlords have responded to this and there has been significant interest in fixed rates, useful to guard against rate rises.

“Investors are likely to continue to do this as their renewal dates come up and therefore I’m sure the remortgage market for buy-to-let will remain buoyant over the coming months.”

Source: Mortgage Introducer

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Attention buy-to-let landlords! You could boost your returns with this simple trick

Over the past few decades, buy-to-let investing has generated a tremendous amount of wealth for investors.

According to the Office for National Statistics, over the past 10 years, the average house price in the UK has grown at a compound annual rate of 3.1% from £168,000 to £228,000. Including an average annual rental yield of 5%, this indicates that the average buy-to-let investor has seen a yearly return of 8.1% since October 2008.

These are just estimates based on averages. The actual return achieved by individual investors will vary greatly because there are so many different factors to consider here like mortgage rates, maintenance costs and taxes.

The end of buy-to-let

My figures show that after including the impact of the government’s recent tax changes and slowing home price growth, buy-to-let investors getting into the market today will be lucky to walk away with an annual rental yield of 3.4%, excluding mortgage costs. Capital growth is also likely to be much lower over the next decade than it has been during the prior one. All in all, I estimate buy-to-let investing could produce a 6% annual return for investors getting into the market today.

A return of 6% per annum does not seem like much, especially as this does not include mortgage costs or the cost of property maintenance. But never fear, if you are worried about this low level of return, there is one simple trick you can employ to improve your investment returns.

Diversify, diversify, diversify

The way I see it, the biggest problem with buy-to-let investing is diversification. If you only own one or two properties, it won’t take much for your returns to evaporate. A property sitting empty for a few months or a broken boiler could eliminate a year’s worth of rental profits.

The solution to this problem is to increase diversification, but for most investors, this option is not available. Adding an extra five properties to your portfolio at today’s prices would cost around £1.1m (on average).

With this being the case, I believe the best solution to the diversification problem is to invest rental profits in equities. If you invest your income from rental properties into the stock market, you can achieve diversification and an extra passive income stream, that requires almost no extra work on your part.

Over the past decade, the FTSE 250 has produced an average annual return for investors in the high single-digits. Buy-to-let investing has matched this return since 2008, however, with returns set to fall going forward, I believe the FTSE 250 will outperform property. And, because you can own a FTSE 250 tracker fund inside an ISA, you don’t have to worry about the impact of tax (or changes to the tax regime) on returns.

Overall, if you want to improve your returns from buy-to-let investing, diversifying into equities could be the best decision you will make, I believe.

Source: Yahoo Finance UK

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How you can become a buy-to-let investor with just £1,000

Over the past few decades, buy-to-let investing has generated a considerable amount of wealth for investors. But rising property prices, which have helped investors who are already in the market, have made it harder for others to set up their own buy-to-let enterprise.

Today, the average house price in the UK is approximately £260,000. On average, a buy-to-let mortgage requires a down payment of around 40% implying an upfront payment of £140,000 is needed to get on the buy-to-let ladder. Ten years ago, when the average home price was just £160,000, investors would have required a deposit of just £64,000.

However, if you are looking to get into the buy-to-let business, I shouldn’t let these figures put you off. Today, there are more ways to make money from property than ever before.

Buy-to-let with £1,000

My favourite way to invest in property is with listed real estate investment trusts or REITs. What I like about these instruments is that all it takes is the click of a button to buy into a diversified property portfolio managed by experienced property professionals.

You can also buy exposure to sectors you wouldn’t be able to access individually, like commercial or industrial property.

At the time of writing, some of the UK’s largest REITs support dividend yields of nearly 5%. British Land and LandSec yield 5.6% and 5.8% respectively, which is around the same as the average buy-to-let yield. The only difference is that when something goes wrong, you don’t have to sort out the problem or pay for it. To invest in a REIT you only need a few hundred pounds.

Peer-to-peer lending

Another way to profit from property without having to scrape together £140,000 is to use a peer-to-peer site such as LendInvest or Landbay.

Both of these platforms connect investors with borrowers looking for financing secured against UK property. Landbay specialises in connecting borrowers searching for a buy-to-let mortgage, whereas LendInvest offers buy-to-let funding as well as bridging and development finance.

Using these platforms, you can generate income from property with as little £100 a month, and yields of 6% are on offer.

As with all peer-to-peer lending, you could end up losing some of all of your investment if borrowers default — that’s the one drawback of using these platforms.

Buy-to-let share

If peer-to-peer investing is too risky for you, I reckon property crowdfunding might be a safer bet. Platforms such as Property Partner enable people to invest in individual residential properties, in a similar way to investing in a REIT.

Investors who contribute capital will receive a monthly rental income and benefit from any capital growth. The properties are all managed by the company, so once again, this is a hands-free way to profit from buy-to-let.


So all in all, if you want to get into buy-to-let but don’t have enough capital to buy a property outright, there are plenty of other options.

I believe some of these strategies could even be better than going down the direct route as they require much less effort on your part, and give you more scope for diversification.

Source: Yahoo Finance UK

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Bank Of England Reports Tax Changes Harming Buy To Let Investment

Tax and regulatory changes are negatively impacting the buy to let sector according to the new data from the Bank of England.

The value of mortgages taken out by landlords has fallen again during the second quarter of the year in comparison to the same period of 2017. Since 2016, buy to let lending has fallen dramatically. The introduction of the 3 per cent stamp duty surcharge, as well as the phasing out of mortgage interest relief and the 10 per cent wear and tear allowance has seriously impacted landlords.

The data released yesterday by the Bank of England noted a decline in both new buy to let lending as well as remortgaging by landlords. This is in spite of the fact that the outstanding value of all residential loans continued to grow, increasing in the second quarter of 2018 to £1,417.2 billion, which is up 3.8 per cent year-on-year.

New loan commitments that were agreed to advance in the coming months during Q2 this year reached a peak that had not been seen since Q1 2008, according to the figures from the Bank of England.

However, the overall proportion of remortgaging and buy to let loans in particular have fallen in recent times, according to statistics. Buy to let mortgages accounted for a mere 13.1 per cent of new lending. This change is largely down to recent regulatory and tax changes in the sector.

Founder of mortgage platform Dashly, Ross Boyd, spoke out about the results: ‘Where homeowners tread, landlords are continuing to choose not to follow. For investors it’s more of the same, with the decline in buy to let lending since the first quarter firmly against the run of play. It’s more evidence of a slowdown precipitated by hostile tax changes in recent years that have left landlords licking their wounds.’

Source: Residential Landlord