Posts with tag: rental yields

Many Landlords could Make a Loss on their Properties in the next 2 Years

Published On: June 5, 2019 at 8:56 am


Categories: Landlord News

Tags: ,

Many private landlords could make a loss on their properties over the next two years, according to the latest monthly analysis from property investment specialist BondMason.

The BondMason Private Landlord Index, which assesses investment returns in the UK’s private rental sector, shows that the average buy-to-let landlord will be lucky to generate annual returns above 2.5% for the next couple of years.

In fact, many private landlords could make a loss in the next two years, once costs, tax and their mortgages are taken into account, with an average investor likely to make just a 2.5% return on their investment each year – and that’s assuming that UK house prices bounce back following a poor 2018.

By contrast, listed corporate residential landlords continue to generate good returns of 10%+ per year, according to BondMason’s BRIX index.

The BRIX index, which tracks returns of shares in corporate residential landlords, was up by 2.5% on a monthly basis in April and 10.7% annually.

On the other hand, the Private Landlord Index shows that an average landlord will make almost no money from the rent received after expenses and tax are deducted this year, while many may make a loss. Assuming the property market is slightly healthier than in 2018, the capital gain from house price growth will still only give an overall return of around 2.5%.

Many Landlords could Make a Loss on their Properties in the next 2 Years

Part of private landlords’ woes come from the effective tax rate that they face, which has soared from 8% of their rental income at the start of 2015 to 47% today. It will go up further to an effective rate of as high as 56% next year, when counting the non-deductibility of mortgage interest.

Assuming slightly higher, but still subdued, house price growth this year and next, the average buy-to-let landlord will be lucky to generate a return of more than 2.5% this year and into 2020, BondMason warns.

Stephen Findlay, the CEO of the firm, explains: “Britain has around 2.5m private landlords, but we can see this to be a high water mark, as the high tax rates that have now kicked in mean that many landlords will struggle to cover the cost of their mortgage and other expenses, and may only make money by selling their property.

“By contrast to the decline in fortunes of the direct buy-to-let market, there are interesting opportunities for private investors who want exposure to residential property investments through corporate landlords.”

He continues: “Corporate activity in the private rental sector continues to grow, with the burgeoning build to rent market gaining momentum. A number of these companies are now listed on the LSE and AIM stock markets, and provide investors with the investment opportunity to access returns from the underlying buy-to-let property market, without having to buy a property directly.

“However, private investors need to do their research before deciding to invest if they are looking to get exposure to the residential rental property market. Many listed property companies and funds are weighted towards the commercial property sector, and those categorised in the residential sector include housebuilders, which exhibit different characteristics to the corporate landlords.”

Findlay adds: “So, investors have to choose carefully to identify the relatively small but growing number active in the residential rental area.”

Landlords in Scotland Continue to Enjoy Strong Yields

Published On: May 28, 2019 at 9:05 am


Categories: Landlord News

Tags: ,,

Scotland’s private rental sector continues to go from strength to strength, with the average rental property north of the border generating strong yields for landlords, the latest data from Your Move Scotland reveals.

Rental yields in Scotland continue to compare favourably to those in England and Wales, with the average return north of the border standing at 4.7% in April, compared to 4.3%.

The only two regions south of the border to offer strong yields to rival Scotland’s were the North East (5.0%) and North West (4.8%).

Across Scotland, the average rent price increased by 1.7% in the 12 months to April, to reach £581 per month.

Rents rose in three of the five regions, led by the Highlands and Islands, where prices were up by an average of 3.6% year-on-year, to hit £688 a month.

The only area to boast higher rent prices was Edinburgh and Lothians, at £693. This followed a 3.1% increase over the year to April.

The other region to record annual rent price growth in April was the East of Scotland, at 2.1%, taking the average rent to £542 per month.

Brian Moran, the Letting Director of Your Move Scotland, says: “As we enter the summer months, we can reflect on the resilience of the Scottish rental market, which has weathered a difficult winter admirably.

“The Highlands have continued their recent trend of strong rental yields. This is fuelled in part by an influx of young professionals into Inverness, such as student doctors at Raigmore Hospital.”

He continues: “The market in this region has been further buoyed by a strong holiday lettings market, as investors and tenants, from the south of Scotland, and even England and Wales, are drawn to the beauty of the Highlands.

“Elsewhere, we have seen rising demand from tenants for two and three-bedroom homes in commuting towns such as West Lothian and South Fife, which are providing a more affordable option for growing families.”

The South of Scotland experienced an average decline of 1.2% in rents year-on-year, to hit £540 per month, while rent prices in Glasgow and Clyde dropped by a more modest 0.3%, to £586.

Your Move Scotland also recorded a decrease in the proportion of households in rent arrears during April. The 10.1% figure is lower than the 10.7% recorded in March, demonstrating an improving position among tenants.

On an absolute basis, the number of households in serious arrears – defined as two months or more – was 9,934 in April.

Northern Regions Continue to Offer the Highest Rental Yields

Published On: May 23, 2019 at 9:36 am


Categories: Landlord News

Tags: ,

Northern regions continue to offer the highest rental yields for landlords across England and Wales, according to the latest data from Your Move.

The letting agent revealed that rent prices in England and Wales edged slightly higher over the 12 months to April, by an average of 0.5%, to reach £861 per month.

The West Midlands overtook the South West as the fastest growing region for rent prices in April. The average rent increased by 4.0% in the year, to hit £641 a month. The South West recorded rent price growth of 3.7% in the same period, to £701.

Other areas to record strong growth included Yorkshire and the Humber, where rents were up by 2.5%, to £589, the North West, where prices stood at £648, following 2.3% growth, and the East Midlands, where rent price growth stood at 2.2%, to reach £666.

At the other end of the spectrum, rents declined in two regions in April – by 1.1% in London and 2.2% in the East of England, where the average rent was £874 as a result.

London remained the most expensive region to rent a home in the UK in April, at an average of £1,262 per month.

The North East remained the cheapest place to rent, at just £538 a month on average.

Once again, northern regions offered the highest rental yields in April, led by properties in the North East, which typically returned 5.0% to landlords, while those in the North West made an average of 4.8%.

This contrasts with an average yield of 3.2% in London, and 3.3% in both the South East and South West.

The average yield in England and Wales was 4.3% in April – the same as March’s figure, but slightly down on the 4.4% recorded in April 2018.

Your Move also reports that tenant finances remained relatively healthy in April, with the proportion of renters struggling with their rent payments standing at 9.1% in the month, which is down from 9.4% in March and February.

Martyn Alderton, the National Lettings Director of Your Move, says: “Across England and Wales, there are those areas which are seeing rents rise, and those where they are flat or falling.

“It is the areas which have seen periods of strong growth in recent years, such as London and the East of England, which have dropped back slightly.”

He continues: “Other areas of the country, including the West Midlands, are starting to catch up and are growing at an attractive rate.

“Regardless of the short-term rent fluctuations, the property market remains a great place to invest, with landlords also enjoying stable returns compared to last month.”

Rental Growth in London Presents Opportunity for Landlords

Published On: May 10, 2019 at 8:16 am


Categories: Landlord News

Tags: ,,

Rental growth for property in the UK has increased by 0.96% in the year to April, according to the latest Landbay Rental Index. However, slow rents in London (0.66%) continue to weigh down on otherwise resilient rental growth in the rest of the UK (1.11%).

Landlords, this could be a prime opportunity for investment, if you have your eye on higher rental growth. Looking north of London, or even England, could reap rewards.

The highest year-on-year rental growth can be seen in Scotland, at 1.78%. Here, the average rent is £750, which is only slightly less than the UK’s average, when discounting London (£773).

In particular, Edinburgh City has the highest rental growth, at 5.44% year-on-year. Glasgow City and East Lothian are also doing well, at 2.59% and 2.21% respectively.

Heading over to Wales, results show the country to have experienced the second highest growth. However, rents are lower at an average of £658. The second highest rental growth in the UK is in Methyr Tydfil at 4.65%, whilst Blaenau Gwent is third at 3.92%.

In England, Nottingham has the highest rate of rental growth at 3.84%. Rutland and Leicester are also good options for landlords looking to move further north from London, with growth at 2.56% and 2.33% respectively.

John Goodall, CEO and co-founder of Landbay said: “Landlords can rest assured that there is decent rental growth to be found across the UK, particularly if they look north of London. On the face of it, landlords have had a tough time in the past few years, from increased regulatory pressure to a significant increase in stamp duty costs, yet they have managed to shoulder many of these costs without passing them onto tenants. For brokers, this provides them with the opportunity to give expert advice to their clients about changing elements of the housing market and which areas have the most potential in the coming months.”

Landlords can Maximise their Rental Returns in Scotland, Claims Your Move

Published On: May 3, 2019 at 8:02 am


Categories: Landlord News

Tags: ,,

Landlords can maximise their rental returns by investing in the property market in Scotland, according to new data from Your Move.

Your Move Scotland reports that the average rental yield for investors with properties north of the border increased for the first time since March 2017 in March this year.

The letting agent found that average rental returns in Scotland stood at 4.7% in March, which is up from 4.6% in the previous month.

As a result, rental returns for landlords with properties in Scotland are now at a six-month high. This contrasts to England and Wales, where yields have held steady, at an average of 4.3%.

The only two regions in England and Wales to offer rental returns higher than the Scottish average during March were the North East and North West, at 5.0% and 4.8% respectively.

Brian Moran, the Lettings Director for Your Move Scotland, says: “Investors in Scotland have seen stronger returns this month than in February.

“This is the first rise in monthly yields since March 2017, and demonstrates why many investors from elsewhere are now looking towards Scotland to maximise returns.”

According to the firm, the average rent in Scotland increased by 1.8% in the 12 months to March, to reach £580 per month.

The Highlands and Islands recorded the greatest rise, taking the average rent price to £688. This is up by 4.9% on March 2018, but growth has slowed from the double-digit increases seen last year.

The only region to record higher rents was Edinburgh and Lothians, where the typical price was £699 in March. This followed a 4.6% year-on-year rise.

Elsewhere, rents were up by an average of 1.4% in the East of Scotland, and 0.9% in Glasgow and Clyde. A typical rent price in the East was £541 in March, while Glasgow’s was £589.

The South of Scotland was the only region to see rents fall on an annual basis, dropping by an average of 1.9% in March, to £537 per month.

Across Scotland as a whole, the average rent rose by 1.8% in the 12 months to March, to hit £580. This is up by 0.2% on a monthly basis.

However, Your Move Scotland’s data also shows that the proportion of rental households in arrears increased modestly in March. Some 10.7% of all tenancies were behind with their rent payments in the month – up on the 10.5% recorded in the previous month. Despite this, the level of arrears is still below the 11.2% seen in December 2018.

On an absolute basis, the amount of households in serious arrears – defined as two months or more – was 8,283 in March.

Moran adds: “With more tenants now renting for longer, thanks to the introduction of the PRT [Private Rental Tenancy], landlords are benefitting from the increased security and stability provided by these tenancies.”

Rent Prices are Flat, but Yields Perform Strongly, Reports Your Move

Published On: April 30, 2019 at 8:01 am


Categories: Lettings News

Tags: ,

The average rent price in England and Wales remained flat in the 12 months to March, reaching £860 per month, according to the latest research by Your Move.

Rent prices in the South West continue to rise faster than all other regions, at an average of 3.6% in the year to March, to hit £701 a month.

Other regions to record strong growth include the West Midlands, where rents increased by 3.3%, to reach an average of £638, and Yorkshire and the Humber, where rents stand at an average of £589, following a 2.3% rise.

At the other end of the spectrum, the East of England saw the sharpest decline, at 2.0% over the 12 months to March, taking the average rent price to £875 per month.

Rents dropped by an average of 1.3% in London over the same period, but, with the typical price standing at £1,260 a month, the capital remains by far the most expensive region to rent a home in England and Wales.

Month-on-month, the East of England and North East both saw rent prices fall by an average of 0.3% – the only two regions to post such a decrease.

The North East remained the cheapest place to rent in March, at just £539 a month.

The average rent price in England and Wales as a whole fell by 0.1% between February and March.

Perhaps unsurprisingly, therefore, tenant finances remained solid last month, with the proportion of renters struggling with their finances remaining at 9.4% in March.

Martyn Alderton, the National Lettings Director of Your Move, says: “Yields continue to perform strongly, with just one region offering lower returns this month than in February.

“We continue to see landlords in the south of England looking further afield for their next rental opportunity, as northern properties deliver stronger yields.”

He continues: “The growth of the urban rental market has created yield hotspots for private landlords in northern cities like Manchester and Liverpool.

“Universities in these major cities are attracting students from across the country. Young professionals are also increasingly relocating to the north. The investment in infrastructure and culture, for example, the relocation of the BBC and ITV to Manchester, has undoubtedly boosted the desirability of the city among this group.”

Landlords, are you keeping your rent prices steady? At the same time, have you seen your yields perform strongly?