Despite the increased pressure on buy-to-let landlords from additional regulation and tax changes, property investment still provides returns well above the average savings rate. The buy-to-let market is supported by continued strong demand for rental properties from residents in the UK. With another predicted downturn, accompanied by rising inflation, which will see an increase in interest rates, property provides a safe haven for an investor’s money when compared to shares, bonds and stocks.
Recent research conducted by agents, Your Move, has discovered that the average return on buy-to-let investment properties in Wales and England was stable between August and July this year. Each of the ten regions surveyed provided the same yield to property investors within the September survey as it did previously in August. Buy-to-let properties within the Northern regions offered higher percentage returns than properties located within Southern areas.
The average buy-to-let investor located in the North East experienced an annual yield of 5 per cent in the 12 months leading up to August, while in the North West, the annual yield was 4.8 per cent. Landlords located in London experienced the smallest percentage returns, with 3.2 per cent recorded during the month of August. Across all of Wales and England, buy-to-let landlords have enjoyed average yields of 4.4 per cent in the month of August, the same figure experienced in both July and June.
Despite the much publicised mass sell off of investment properties, the majority of buy-to-let landlords seem committed to the sector for the longer term, with many landlords having worked within the industry for at least 15 years. More than half of all buy-to-let landlords regard investing in property as a means for providing for their pension income in later years. Despite rent levels having been rising steadily during the past seven years, average yields have slightly declined by approximately 1 per cent. However, there has also been no increase in the level of rent arrears.
The survey also revealed that approximately 29 per cent of small-scale buy-to-let landlords got into the profession by accident, and these were primarily females under 45 years of age. 20 per cent of those questioned perceived themselves as professional landlords, where it is a full-time career, and these were mostly over the age of 45. The other group of landlords were part-time, who invested in buy-to-let property alongside another career, and these saw their investment as a regular source of income and a pension. The research has demonstrated that the private rented sector offers significant opportunities and provides landlords with a steady source of income into retirement.
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