Landlords should be confident in the buy-to-let sector, 12 weeks after the Brexit vote was announced, according to a seasoned property investor.
Recent data from Rightmove shows that the average asking price of a property coming onto the market has started to recover, following a dip that occurred around June’s EU referendum. The property portal reports that over the last month, the average asking price has risen by 0.7% (£2,77), to reach £306,499.
Additionally, figures from Knight Frank show that the number of new rental properties coming onto the prime central London market rose by almost 40% between May and July, although rent prices dropped by 4.1%.
However, the number of new prospective tenants also increased, by 7.2%, while the amount of new tenancies was up by a fifth. Average gross prime yields were steady, at 3.1%.
Furthermore, rents across the UK have continued to rise over August, according to HomeLet’s Rental Index. Last month, tenants agreed to pay an average of £913 per month, up by 3.1% on the same month in 2015.
The monthly increase recorded in August is comparable to the annual growth of 3.5-3.8% seen over the previous four months. Contrastingly, annual rent price inflation was running at close to 6% this time last year.
According to experienced investor Peter Armistead, of Armistead Property, landlords and property investors have many reasons to be confident in the buy-to-let sector.
He says: “Mortgage rates are at record lows, which is helping buy-to-let investors make deals. Despite the tightening lending criteria, finance is cheap and buy-to-let investors are continuing to invest in the market. Last month, TSB launched a range of new fixed rate buy-to-let mortgage products, with interest rates lowered on certain products by up to 0.4%.
“The Bank of England’s cut in the base rate last month for the first time in seven years will have boosted investor confidence. Research from Connells Survey and Valuation shows buy-to-let activity surged 12.7% in August.”
He continues: “Landlords are enjoying excellent yields outside London, and many are enjoying returns of between 4-6%. Manchester has some of the best rental yields in the UK, with annual rental yields of 6.02% over five years. An average residential property in Manchester is just £155,000, while a flat in a good area costs as little as £120,000. A property in Manchester can provide a 5% minimum cash rental yield and a typical 12% total cash yield, including 7% capital appreciation. Demand for rental accommodation is strong, and by comparison with other regions, housing is cheaper.”
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