Posts with tag: rental yields

North West England most lucrative area for landlords

Published On: December 14, 2015 at 3:42 pm

Author:

Categories: Landlord News

Tags: ,,,,

The North West of England has received an early Christmas present with the news that it is the most lucrative region in Britain for private sector landlords.

Both Manchester and Liverpool made it into the top-four cities for rental yields.

Northern Rule

Online property marketplace LendInvest’s latest quarterly report indicates that Sunderland, Blackburn and Durham also rank highly in the list, as the North as a whole enjoys substantial yields. In terms of house price growth, London and the South East lead the way.

Lendinvest’s report also looks at trends in rental yields, capital gains and total gross return on investment. The top 15 performing postcode regions for capital gains were all located in London and the surrounding area. Inner London however stands in 18th place for rental yield, but top for capital gains.

Capital gains carry on tracking average house prices, with 80% of the 15 best postcode areas also featuring for average house prices. However, the report shows that rental yields are no indication of average house values. Just one of the top 15 postcode areas for rental yields featured in the top 15 for property prices.

Impact

Christian Faes, chief executive of LendInvest, feels that the stamp duty tax changes coming into force next year could have a serious impact on the market. Faes said, ‘there could be some weakening in London’s dominance of capital gains tables if house price growth does soften slightly as forecast and as new buy to let stamp duty hikes take effect.’[1]

‘Inner London margins may narrow slightly, creating opportunities for house prices in other postcode areas, particularly those in the South of England, to better compete,’ he continued. [1]

North West England most lucrative area for landlords

North West England most lucrative area for landlords

Faes went on to say that he feels changes to mortgage interest tax relief and stamp duty for buy to let landlords will ultimately professionalise the market. ‘Landlords whose tax payments under the new regime make letting their properties unsustainable, may make arrangements to leave the market. In turn, we will see fewer highly geared rental properties that push up prices and take stock out of the housing supply for aspiring owner occupiers and first time buyers drawn to densely populated urban area for work.’[1]

Cross Country

Mr Faes also said that there is no one place for market leading yields and capital gains. He believes that 2016 could be the year for the, ‘cross country landlords,’- landlords who live in one city but rent out homes in another.

‘We could expect to see more landlords letting property in the North and Midlands’ major urban areas for more immediate upside, without moving from their family homes in which gains can be longer to materialise,’ he concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-landlords-rents-yields-2015121411318.html

 

 

Tenant Demand Grows as Yields Remain Steady

Published On: December 8, 2015 at 12:27 pm

Author:

Categories: Landlord News

Tags: ,,,

Tenant Demand Grows as Yields Remain Steady

Tenant Demand Grows as Yields Remain Steady

Demand from tenants for rental properties continued to grow around the country in the third quarter (Q3) of the year, according to a survey of almost 2,000 landlords from Paragon Mortgages.

The study also found that rental yields – the annual rental income as a percentage of the property value – have remained steady throughout the year.

The research, conducted by BDRC Continental on behalf of Paragon Mortgages, found that the average national yield was 5.6% in Q3. Amongst Paragon customers, the figure was higher, at 5.9%.

The greatest proportion of landlords, 17%, reported yields of between 3%-4%, while one in ten investors have seen yields of 10% or more. Landlords in Yorkshire and the Humber reported the highest average yield, of 6.1%, with the lowest found in outer London, at 4.8%. However, outer London had the second largest rise in levels of tenant demand.

Regarding tenant demand, the East of England performed the best in Q3, with 52% of landlords reporting an increase in demand. In the North East, just 31% of investors saw a rise, while the national average is 41%.

This indicates strong annual growth in tenant demand across several regions since Q3 2014, with demand in the North East rising from 23% to 31% and in outer London from 42% to 48%.

Director of Mortgages at Paragon, John Heron, says: “This research shows that yields and tenant demand have remained strong throughout Q3, in common with 2015 overall. The figures reflect a steadily improving economic outlook for the UK as a whole and show that more and more people are actively choosing the flexibility of making a home in the private rented sector.

“Yields too have remained stable throughout 2015. Q3’s data shows London and the South East slowing down somewhat, while yields in the regions are growing. This represents a welcome rebalancing of the national economy, with some of the heat from London’s economy escaping the M25 and being distributed around the country.”1

1 https://www.landlordtoday.co.uk/breaking-news/2015/12/tenant-demand-continues-to-grow-in-q3-while-yields-remain-stable

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant demand grows in Q3

Published On: December 8, 2015 at 11:52 am

Author:

Categories: Property News

Tags: ,,,

A report from Paragon Mortgages seems to show that tenant demand has risen further during the third quarter of 2015.

The survey of almost 2,000 landlords also showed that rental yields and annual rental income as a percentage of a property value has remained fairly constant throughout 2015.

Increase

Results from the report indicate good news for buy-to-let landlords, with rental yields averaging at 5.6% across the country in Q3. 17% of landlords reported yields between 3% and 4%, with one in ten landlords recording yields of 10% or more.

Yorkshire and the Humber recorded the largest yields in the period with 6.1%, while London reported the lowest with 4.8%. This was surprising considering the capital has the second largest increase in levels of renter demand.

In the East of England, 52% of landlords reported an increase in demand, which was the highest of any area in Q3. This figure dropped to 31% for the North East. Nationally, an average of 41% of landlords said that demand had risen in the period.

This shows a strong annual increase in demand across the country. Demand in the North East has risen from 23% to 31% and in outer London from 42% to 48%.

Tenant demand grows in Q3

Tenant demand grows in Q3

Strong

‘This research shows that yields and tenant demand have remained strong throughout Q3, in common with 2015 overall,’ said John Heron, director of mortgages at Paragon. ‘The figures reflect a steadily improving economic outlook for the UK as a whole and show that, more and more people are actively choosing the flexibility of making a home in the private rented sector.’[1]

‘Yields too have remained stable throughout 2015. Q3’s data shows London and the South East slowing down somewhat, while yields in the region are growing. This represents a welcome rebalancing of the national economy, with some of the heat from London’s economy escaping the M25 and being distributed around the country,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2015/12/tenant-demand-continues-to-grow-in-q3-while-yields-remain-stable

 

 

Buy-to-let investment yields 10% per year

Published On: October 19, 2015 at 10:49 am

Author:

Categories: Finance News

Tags: ,,

There has been encouragement for buy-to-let investors with the news that there were average returns of almost 10% in England and Wales over the last twelve months.

The latest Buy-to-Let Index from Your Move and Reeds Rains shows that landlords saw gross yields rise to 5.2%, while spiralling property prices increased total average yields to 9.4%.[1]

Record Rents

Additionally, the Index shows that rents rocketed to an all-time high of £816 per month in September, in comparison to £768 at the same period last year.

What’s more, rents in London, the South-East, South-West. East and West Midlands also soared to regional records. On average, rents rose by 6.3% during the last twelve months, despite consumer price inflation becoming negative. [1]

Rents in the capital are rising at the highest rate, up by 11.6% over the year to stand at a new record of £1,301 per month.[1]

Real terms

Cumulatively, the different with inflation is much sharper. Rents are now 24.4% greater than in January 2010, with the index of CPI inflation just 14.1% higher. In real terms, rents have risen by 10.3% since the beginning of the decade.[1]

Buy-to-let investment yields 10% per year

Buy-to-let investment yields 10% per year

In addition, despite rising rents, tenant finances have also grown, with rent arrears dropping to 8.6% of all rent due.

Adrian Gill, director of Reeds Rains and Your Move, noted that,’ rents are rising strongly in real terms due to the recent acceleration in wages and the much deeper and longer-term shortage of available properties across the UK.’[1]

‘Meanwhile, as the price of everyday essentials plateaus and even falls, rents are no longer following the same broad trends,’ Gill continued. ‘The cost of a place to live has now uncoupled from the cost of living.’[1]

Gill continued by stating, ‘as long as this supply and demand imbalance keeps up, it is hard to see any reversal in the speed of rent rises.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2015/10/buy-to-let-investors-earn-near-10-a-year

 

Landlords under pressure as yields slow

Published On: September 24, 2015 at 3:18 pm

Author:

Categories: Landlord News

Tags: ,,

Following a considerable period of buy-to-let boom, landlords and investors alike are beginning to feel the strain, with average yields dipping across England and Wales.

Total yields for houses in multiple occupation (HMOs) fell by 1.3% to 9.3% between the first and second quarters of 2015, whereas yields for typical buy-to-let properties fell less sharply, from 6.4% to 5.8%.[1]

Regional differences

With some landlords and investors feeling the squeeze, the regional data is very different. Research from HSBC shows that the average rental yield in Manchester is 7.98%, taking pole position in the best place to make a buy-to-let investment. Kingston-upon-Hull and Blackpool came next on the list.

Manchester’s position has been built on property prices and strong rental demand. The survey by HSBC indicates that prices in the region have increased by 4%, from £104,244 in 2014 to £108,870. Average rents remained at a steady pace, up from £8,316 to £8,628 in the second quarter of the year.[1]

The complete top-ten was as follows:

Location % of housing stock privately rented Average house price Average annual rent Rental yield
Manchester 26.85% £108,870 £8,628 7.98%
Kingston upon Hull 19.02% £69,135 £5,400 7.81%
Blackpool 24.16% £79,654 £5,856 7.35%
Forest Heath 21.80% £171,322 £12,432 7.26%
Coventry 19.02% £116,946 £8,424 7.20%
Southampton 23.42% £151,415 £10,800 7.13%
Nottingham 21.64% £89,312 £6,288 7.04%
Liverpool 21.75% £90,426 £5,928 6.56%
Cardiff 20.32% £150,892 £9,624 6.38%
Portsmouth 22.28% £155,696 £9,900 6.36%

[1]

Landlords under pressure as yields slow

Landlords under pressure as yields slow

Top location

‘Manchester has one of the largest student populations in Europe and demand for rental accommodation is strong and by comparison with other regions, housing is cheaper,’ said Peter Armistead.[1]

He feels that the city is, ‘undoubtedly a great place to invest,’ and said, ‘as a seasoned property investor, I have built a successful, mid-sized portfolio of buy-to-let properties in South Manchester. Over the last 12 months I have enjoyed average yields of 6% across my 80 properties. While location is an important factor when considering a buy-to-let investment, the most important lesson I have learned is that landlords need to treat their property as a business. Treat it seriously and get yourself surrounded by a great team of professionals who are better than you.’[1]

‘Whilst the recent property price rises are generally a good thing for home owners, they can be a double edged sword for investors.  With yield cooling, monthly profit margins will be squeezed and investors now more than ever need to make sure they have a solid business plan which is risk management focused. If investors are acquiring buy-to-let properties, it is vital that they purchase below market value in the right area.  This may mean taking on properties that require refurbishment.  As long as all the refurb the costs have been accurately factored into cashflow with a contingency budget, then investors have the potential of higher yields on ‘nearly new’ properties,’ Armistead concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-feel-the-pressure-as-yields-cool.html

 

 

Rental market showing sustained stability

Published On: September 21, 2015 at 4:46 pm

Author:

Categories: Finance News

Tags: ,,

Encouraging signs for the rental market have come with the latest Private Rented Sector trends report from Paragon Mortgages.

The latest trend report for Q3 of 2015 suggests that the rental market remains healthy, taking in key indicators such as rental yields, void periods and tenant demand.

Growth

Data from the report indicates that average rental yields have risen slightly over the last three months from 6.3% to 6.4%. This slight increase is in line with the growth seen throughout 2015. When asked to forecast what would happen over the next 12 months, landlords were confident over sustained stability.[1]

There was also good news in terms of void periods, with the report pointing out that the average period of time that privately rented properties stood unoccupied was a historically low 2.6 weeks. Tenant demand is healthy, with more than 50% of landlords describing this as stable, while 40% said it was booming.[1]

Over half of landlords think that demand will increase over the next 12 months, in comparison to 42% who believe that it will remain stable.

In addition, the report shows that there is an increase in families with children moving into the private rental sector, with a decrease in the number of young couples and professionals. Demand for long-term rental agreements however remains fairly low.[1]

Rental market showing sustained stability

Rental market showing sustained stability

Sustainability

‘Our latest PRS Trends Survey data is indicative of a market growing steadily and sustainably over the long-term,’ said John Heron, Director of Paragon Mortgages. ‘With low void periods and steady demand, which is expected to continue growing, yields remain on a gradual upward trend and landlords are confident they will continue to do so,’ he continued.[1]

Heron also said that the data, ‘reveals the changing demographic of those choosing to live in the PRS.’ He feels this is, ‘reflected in the buying intentions of landlords which seems to be shifting away from investing in multi-occupancy blocks, towards terraced housing-often more suited to young families.’[1]

 

[1] http://www.propertyreporter.co.uk/landlords/rental-market-remains-healthy-says-latest-report.html