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Top Rental Demand Cities For Buy To Let Property Investment

Buy to let property investment relies on rental demand and letting platform, Bunk, has researched where in the UK has the highest rental demand from prospective tenants.

The platform looked at rental listings across all of the major property portals and took an average score for the nation’s major cities based on which had the highest number of properties already let as a percentage of all listings.

The research highlights where the highest level of rental demand currently is based on this supply/demand ratio.

They found that Bristol tops the table as the highest rental demand city for tenants in the UK, with 50 per cent of all properties listed as already having a let agreed and therefore taken.

Newport in Wales has the next highest rental demand with a score of 39 per cent, with Nottingham, Plymouth, Cambridge, Portsmouth and Bournemouth all scoring above 30 per cent.

Oxford with 29 per cent, Manchester 26 per cent, and Glasgow with 25 per cent complete the top 10 cities with the highest rental demand.

At the other end of the scale, the city with the lowest rental demand was found to be Aberdeen, with just 8 per cent of all properties on the major portals listed as already let. Newcastle and Edinburgh were also home to a rental demand score below 15 per cent.

Leeds, Swansea, Liverpool, Cardiff, Belfast, London and Sheffield also ranked amongst the least in demand cities.

In London, Havering is the most in-demand borough with a rental demand score of 43 per cent, along with Lewisham. Sutton, Bromley and Bexley also scored 40 per cent or higher.

Kensington and Chelsea is the least in demand borough at just 9 per cent, with prime central London also accounting for the second and third lowest demand scores in Westminster and Hammersmith and Fulham.

Co-founder of Bunk, Tom Woollard, commented: ‘Bristol may not stack up to London in terms of size and status but the city’s youthful, vibrant image has made it a firm favourite amongst tenants and it has previously been voted one of the best cities to live in across the UK.

‘We’re starting to see a real change in the rental market with a number of the more alternative cities coming to the forefront in terms of popularity. The likes of Bristol, Nottingham and Plymouth are becoming great rental hubs for those looking for a great place to live, without paying through the roof as they would in London or the more established major cities.’

Source: Residential Landlord

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Glasgow Rental Returns Quickest In UK For Buy To Let Property Investment

Glasgow rental returns have been found to be the best the UK for returning buy to let property investors original outlay.

With Glasgow rental returns averaging £10,140 per annum, the original average property cost of £129,764, plus property tax of £5,190, giving a combined total of £134,954 was recouped in just 13.3 years.

The next best city in the UK for returning property investment quickly was Belfast, which took 15.8 years on average, with another Scottish city, Aberdeen, taking third place at an average of 17.8 years.

The report, carried out by letting agent Benham and Reeves, looked at the 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 taxes such as land and Buildings Transaction Tax in Scotland and Stamp Duty south of the border.

With Glasgow rental returns coming top and Aberdeen in third place, it is hardly surprising that when it comes to countries as a whole, Scotland offers the quickest return on property investment with the annual rent returning the original asking price in 17.7 years. This despite Edinburgh taking average 21.6 years to recoup the cost of the average property price of £263,868.

Northern Ireland was the second quickest country to return the full initial investment through rental at 18.9 years, followed by England at 25 years and finally Wales at 26.4 years.

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

Director of Benham and Reeves, Marc von Grundherr, 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.’

With relatively low initial purchase costs, good Glasgow rental returns could amount to good financial sense for aspiring buy to let property investors wherever they are based in the UK.

Source: Residential Landlord

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Scottish Rents Rising On Buy To Let Property Investments

Scottish rents grew by 0.9 per cent over the course of 2018 according to the latest Your Move Scotland Rental Tracker.

Average Scottish rents now stand at £576 per calendar month (seasonally adjusted). On a non-seasonally adjusted basis the average Scottish rent was £584 per calendar month.

The stand out performers for Scottish rent growth were the Glasgow and Clyde area and the Highlands and Islands region.

Rental growth in Glasgow and Clyde surged in 2018 by 12.7 per cent over the year, putting the area slightly ahead of the Highlands and Islands at a growth rate of 12.1 per cent.

Growth in the Highlands and Islands region, and Inverness particularly, was seen top be driven by the University of Highlands and Islands and Raigmore Hospital creating demand from students, doctors and nurses relocating to the area.

Scottish rents in the remaining three regions did not fare as well in 2018.

Edinburgh and Lothian saw rents increase by 4 per cent over the past year, to reach an average of £691.

The East of Scotland saw rents fall by 1.2 per cent in 2018, to reach the lowest average Scottish rent of £532. Southern Scotland fared even worse, with a drop of 3.4 per cent to an average rent of £535.

However, on a monthly basis the East of Scotland showed more promise with 0.4 per cent month-on-month growth from November, bettered only by Edinburgh and the Lothians at 0.5 per cent, while Glasgow and Clyde came in third at 0.3 per cent.

Rental yields on investment remained fairly strong for Scottish landlords, with the average yield on a rental property standing at 4.6 per cent.

This represents only a small annual drop from the 4.8 per cent enjoyed a year ago and remains higher than the average south of the border in England and Wales which stood at 4.3 per cent in December.

All in all, Scottish rents seem to have remained strong in 2018.

Source: Residential Landlord

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Southend Tops Buy To Let Property Investment Table

Southend tops the buy to let property investment market for rental yields according to recent research.

New analysis from Private Finance reveals Southend-on-Sea is the UK’s number one buy to let hotspot for investment, offering average rental yields of 6.6 per cent once mortgage costs are taken into account.

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.

An annual rental income of £23,280 means that landlords in Southend 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 against £231,000).

Four out of 10 areas with the highest rental yields feature in the top ten buy to let hotspots – Westminster, Camden, Tower Hamlets and Southend-on-Sea – but 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 10 and benefit from some of the lowest house prices in the UK, suggesting potential buy to let property investors should not only consider potential rental income when assessing where to invest.

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

Director at Private Finance, Shaun Church, commented: 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.’

He continued: ‘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.’

Top Ten Buy to Let Hotspots by Average Net Rental Yield

Location Percentage of Privately Rented Housing Stock Average house price (July 18) Average house price (July 17) Mortgage costs (interest-only) Average Rent 2018 (Monthly) Average Rent 2018 (Annual) Net Rental Yield Aug 2018
Southend-on-Sea 20.72% £279,358 £272,873 £4,840 £1,940 £23,280 6.6%
Nottingham 21.64% £137,835 £134,019 £2,388 £928 £11,136 6.4%
Westminster 37.56% £970,990 £1,058,953 £16,822 £5,554 £66,648 5.1%
Edinburgh 20.48% £254,170 £239,016 £4,403 £1,410 £16,920 4.9%
Greater Manchester 26.85% £167,928 £160,001 £2,909 £911 £10,932 4.8%
Liverpool 21.75% £136,521 £127,060 £2,365 £725 £8,700 4.6%
Tower Hamlets 30.84% £473,327 £449,170 £8,200 £2,447 £29,364 4.5%
Camden 30.46% £810,708 £865,076 £14,046 £4,178 £50,136 4.5%
Coventry 19.02% £185,990 £175,375 £3,222 £952 £11,424 4.4%
Southampton 23.42% £212,155 £205,687 £3,676 £1,045 £12,540 4.2%

Source: Residential Landlord

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Buy-to-let vs the stock market – which is better?

Buy-to-let property investment is a popular way of generating wealth in the UK. And many buy-to-let investors have done well over the last decade, as not only have they received rental income but they have also generated sizeable capital gains as property prices have soared.

But is buy-to-let investing better than stock market investing? That’s hard to say, as both have their advantages and disadvantages. If you’re considering whether you should invest in a buy-to-let property or buy stocks, here are four issues to consider:

Capital outlay

The first big difference between buy-to-let investing and the stock market is the amount of capital you’ll need to get started. If you’re looking to buy a property, it’s likely you’ll need a fairly large deposit. Buy-to-let mortgage requirements are stricter than ordinary mortgage requirements (and you’ll have to be approved) so you may need a deposit of 20%-40% of the value of the property. Also, don’t forget stamp duty. This varies depending on the value the property but could make your purchase considerably more expensive. For example, stamp duty on properties valued between £250,001 to £925,000 is 8%. You could be looking at a large sum to invest in a buy-to-let property.

In contrast, with stocks you could potentially get started with just a few hundred pounds. So, in this regard, stock market investing does have an advantage.

Cashing out

It’s also important to consider how easily you can cash out of your investment if you wanted to. Again, stocks have an advantage here, as in general, they are very easy to sell. Normally, you’ll have your cash back in your bank account in a matter of days. In comparison, it could take months to sell a property. And you’re likely to incur significant fees in the process.

Spreading your risk

Another issue to think about is diversification. With a buy-to-let property, all your eggs are in one basket, which adds risk to the investment case. For example, what if you buy a UK property and prices fall by 20% due to Brexit?

In contrast, with stocks, it’s easy to spread your capital over many different investments and reduce your risk. Stock market investors can invest across different geographic regions (UK, US, Europe, Asia, emerging markets etc.), different sectors (technology, financials, healthcare etc.) and different sized companies (large-cap, mid-cap, small-cap). That way, if one particular area underperforms, it should be offset by stronger performance in other areas.

Regulation

Lastly, don’t forget regulation. In recent years, the UK government has had buy-to-let investing in its sights, and there are now far more regulations that impact investors. For example, landlords now need to check whether tenants have the right to live in the UK, and buy-to-let properties now need to have a certain energy rating. There’s also talk of a UK-wide landlord licensing system and regular rental property inspections. When you consider the extra stamp duty payable and the fact that by 2020 no mortgage interest will be deductible from your tax bill, the attraction of buy-to-let has certainly diminished in recent years.

When you consider the four issues above, stock market investing clearly has advantages. That’s not to say buy-to-let doesn’t have a place within a diversified investment portfolio, but investors do need to be aware of its drawbacks.

Source: Yahoo Finance UK

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Women Own Nearly Half UK Buy To Let Investments

Buy to let property investment is far more evenly split between men and women than other forms of investment, according to Ludlowthompson, a London estate agent.

Women comprise 46 per cent of the UK’s buy to let property investors, or 1.1 million of the 2.4 million in the sector. This comes from an analysis of Government data from ludlowthompson.

They also generate 43 per cent or £13.8 billion of the total £32.3 billion generated in rental income by the UK’s buy to let property investors. In contrast, in other types of savings such as pensions there is a far larger gap in ownership between the two genders. For example, women receive just 37 per cent of the income from pensions, equating to £46.5 billion. In contrast, men receive £79.3 billion of income from pensions.

The buy to let sector may have proved itself to be more progressive than expected, with a more even distribution of asserts marking an important step towards gender equality.

Ludlowthompson has suggested that one reason why women might have been active investors in buy to let is due to the fact that residential property is a relatively stable asset and not likely to drastically decline in share value. Research that looks into different investment strategies favoured by the two sexes found that women tend to be less keen on speculative investment types than males.

Stephen Ludlow commented: ‘Whilst a lot of men get entranced by get-rich-quick investments like CFDs and cryptocurrencies – women are said to much more grounded and prefer lower risk investments like real estate. When we started our business 25 years ago we noticed that it was an investment that seemed to be favoured by women over men. That’s been great news for those early pioneers as residential property investment has easily beaten other outperformed other asset classes like shares, bonds and cash.’

He continued: ‘Women who have built up substantial buy to let portfolios deserve a bit of recognition as they have done this in the face of constant criticism that buy-to-let property is risky. The reality is that assets like shares have proved to be far riskier.’

Source: Residential Landlord