A new league table has been created of the best places for landlords to invest in buy to let and guess who’s in the top 5 for the UK? Burnley!
The Compare The Market service has looked at how property prices and rental income produce yields, and factoring in the popularity of the locations with renters searching for properties online.
Analysis shows Burnley to be the latest hotspot for landlords, with average annual rental yields of 7% – the current highest in England. Landlord insurance specialists Direct Line, shows that the average yield nationwide is currently 3.6% in England. The research shows that landlords in Burnley are able to gain greater returns than anywhere else in the UK, with an average house price at just £76,300, and annual rents of £5,338.The Lancashire town is followed by Glasgow at 6.9% and Belfast at 6.4%. Meanwhile, Forest Heath in the East of England, County Durham, Stoke-on-Trent and Hull were also well above the national average.
Christina Dimitrov, business manager at Direct Line for Business.‘As the number of renters across the UK increases, so too has the number of private landlords, with more than five million privately-let properties currently in the UK. With this increased competition, it is more important than ever that landlords are able to offer their tenants well maintained and fully insured properties that will provide best return on their investment in the future,’ she added.
A checklist of the top things UK property investors need to consider, created by a North West property development company Salboy:
For genuine property investment, you will require at least:
For any typical Buy-to-Let mortgage, you will need at least a 25% cash deposit.
✔ GOOD CREDIT SCORE
To secure a mortgage, you will likely need a decent credit rating to access finance.
✔ LONG TERM STRATEGY
The best returns always come to those who have waited. Don’t rush your investment strategy.
Anything else isn’t a property investment, it’s a get rich scheme.
Avoid getting caught out – Do your own research!
Make sure you buy a property that fits your own investment strategy, not a strategy that fits the training or property that you’re being sold. Do your own research and get educated.
Create a long-term strategy based on return on investment
Instead of focusing on yields, have an investment strategy built around ROI. That can help determine if a property investment is a good investment option. Consider whether you want a short, medium or long-term investment strategy.
1. Get rich quick
Beware of property gurus promising overnight success without any money. You always need capital to invest in property.
2. Unrealistic Rental Yields (%)
Yields are easily exaggerated and it’s essential to look beyond yield alone and consider return on Investment (ROI).
The FCA regulates the ‘guaranteed’ rents and returns. There is a legal requirement for companies to comply with offering these. Yet many still do without complying.
4. ‘Assured’ Returns
Assured rents are often bundled in the property price of new-builds and can exaggerate the yields available on that scheme which may impact finance availability.
5. Short-term strategies
Be aware of new investment strategies like short-term lets, hotel rooms and HMO’s. Not all have the same level of risk and many face increase restrictions.
6. Below Market Value
Cheaper properties are not always the best option. Raising the question, why is the property distressed and the seller willing to give up the profit? Is it really BMV?
7. Tenant profile
Every tenant is different – some require more time to manage, more stress, increased void periods and possible increased wear and tear. Consider what your return on time invested will be?
8. Options for exit
What is the resale market like for this kind of investment? Is it mortgageable? Some property investments have great yields in the first 5 years but limited options or no options for exit.
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