Despite the added pressure on landlords, from tax changes to many additional regulations, buy-to-Let (BTL) investment still offers returns well above average savings rates.
This is supported by the still strong demand for renting in the UK, and the fact that should there be another downturn, accompanied by rinsing inflation (interest rates are on a rising trend), then property offers a safe haven for money when compared to stocks, shares and bonds.
A recent survey carried out by Agents, Your Move, shows that the average percentage return on BTL investments throughout England and Wales was stable between July and August:
- Each of the 10 regions surveyed delivered the same yield to investors in the September survey as they did in August.
- Those BTLs in northern regions earned higher percentage returns than those located in southern areas.
- The average investor in the North East saw an annual yield of 5% in the year to August while in the North West this figure was 4.8%.
- London landlords saw the smallest percentage returns, recording 3.2% during August.
- Across all of England and Wales, landlords enjoyed an average yield of 4.4% in August, the same as in both June and July.
Despite the much touted “sell off”, the majority of landlords appear to be committed to BLT for the long-term, many having been in the sector for 15 years or more and over half see BTL as their pension pot.
Although rent levels have risen steadily over the last 7 years (see charts below) average yields have declined by around 1% in that time, while there has been no appreciable increase in rent arrears levels.
Your Move’s Landlord Survey also reveals that:
Around 29% of the small-scale landlords in BTL were originally ‘accidental’ landlords, who were in-the-main female under the age of 45. Another 20% saw themselves as professional landlords, that is portfolio landlords doing this as a full-time career and were mainly over 45. The rest would be part-time landlords investing in BTL property alongside an alternative career, seeing their investment as both a pension and a source of regular income.
The part-time landlords surveyed were more likely to live close to their rentals than were the accidental or professional landlords, with around 41% living within a striking distance of one to five miles of the property.
Martyn Alderton, national lettings director at Your Move, has said:
“Our research suggests that the private rental sector is still seen to offer significant opportunities, providing many landlords with a source of income and funding into retirement.
“It’s also clear that pension pot landlords are keen to build a personal rapport with tenants who will look after their investment. As an industry, it’s increasingly important that we continue to support these ties, providing long-term benefits to tenants looking for a property to call their home and also for landlords looking for ways to fund their retirement.”
The Your Move BTL Rental Index Charts below show Rent Yields and Rent Arrears:
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