Where’s best to invest in today’s rental market?

Investment in the property market has increased by almost 50% in the last five years.

New research from peer-to-peer lending platform Sourced Capital has revealed the best places around the country to invest in the rental market. The findings are based on current rental yields across the UK property market.

Over the last five years, investment into the real estate, renting and business sector increased by 48.4%. This is one of the largest increases in the non-manufacturing industries behind construction and other service sectors in terms of performance. So despite Brexit uncertainty hitting house price growth, as well as changes to tax regulations and a hike in stamp duty thresholds for buy-to-let landlords, the UK property market is still a good bet for investors.  

The average rental yield across the UK is around 4%, but there are some hot spots around the country that are consistently delivering higher returns than the national average.

Scotland continues to top the charts at 5.8%, with 14 of the best 20 areas for current yields located north of the border.  Glasgow ranks first at present with yields hitting 7.8% on average, followed by West Dunbartonshire (7.2%) and Inverclyde (7.1%).  

Northern Ireland comes second, with yields averaging 5.4%, and Belfast is currently delivering 6.4%.

Yields in England average 4.1% with the North East (4.9%), Yorkshire and the Humber (4.5%) and the North West (4.4%) home to the most favourable rental yields. Burnley ranks at number six in the UK as a whole and the best in England, with the average rental yield currently at 6.6%. Other areas outside of Scotland to make the top 20 include Blackpool (5.9%), County Durham (5.8%), Pende (5.8%) and Hyndburn (5.8%).

For landlords already in the market, London is still a good investment. According to Rightmove’s latest Quarterly Rental Trends Tracker, asking rents are rising nearly twice as fast in the capital than in the rest of the country. London asking rents have hit a new record average of £2,119 per calendar month (PCM) as ongoing lack of supply means rents are 4.2% higher year-on-year, and the rest of Great Britain is up 2.4%

Other findings show that:

  • Over the past 10 years London asking rents have risen almost twice as fast as the rest of Great Britain.
  • Average asking rents outside London have risen by 24%, compared to 45% in the capital.
  • In cash terms, London asking rents are up by £658 PCM compared to £159 PCM outside London over the last decade.
  • North East rents have grown the slowest, up 8.4% from £554 to £601 PCM in ten years.

Stagnant house price growth last year led to a boost for rental yields due to a fall in property values coupled with consistently high rental demand. The so-called ‘Boris Bounce’ following the General Election, means that many industry commentators now think the market has bottomed out. According to Sourced Capital this has led to a flurry of activity in the rental market as investors rush to secure the best deals before returns start to tighten. So the message for investors is “commit now while the market is still finding its feet”.

Here at Team Ringley we are working with funds and institutional investors to create next-generation renting propositions in both the affordable and market rent sectors, in London and beyond.

Five ways to compete with Build-to-Rent

The Build-to-Rent revolution is seemingly unstoppable but buy-to-let landlords can make their offer equally attractive

Build-to-Rent operators are rapidly changing the face of renting in the UK. New apartments, long leases and a wide range of amenities add up to a lifestyle that has strong appeal, particularly for young professionals. In the last year, there has been a surge in the number of completed rental homes in London and in key regional cities around the country. Outside the capital, Manchester, Birmingham Liverpool, Leeds, Glasgow and Sheffield are leading the way. 

And according to recent figures from the British Property Federation (BPF) there are another 35,415 BTR homes are under construction and 75,475 in planning. That’s an increase of 15% over last year. So with all this brand new rental property coming on to the market, buy-to-let landlords will inevitably find themselves facing stiff competition for the best returns on their investment.

Of course, there is still plenty of demand for more traditional rental homes. But if you are a landlord with one or two properties in a town or city that is now well served by the rapidly expanding BTR sector, it is worth bearing in mind that tenants will increasingly be comparing your rental home with one in a shiny new BTR block.

So here are our tips for ensuring your property still has plenty of kerb appeal.

  • Up your game: throw out that dated furniture and invest in high quality fixtures and fittings and fresh, modern décor.
  • Market your property effectively: take good quality photographs while the property is empty and ready to rent. That way it will be shown to its best advantage.
  • Use a professional letting agent to help you find the right tenant for your rental home.
  • Consider offering tenants longer rental agreements. Three-year terms are now commonplace in the BTR sector.
  • Finally, download our PlanetRent app to ensure you give your tenants a professional rental journey from start to finish and to ensure you are compliant with all the latest regulations.

Sam Hay, MD of our Manchester-based lettings business Life By Ringley, has plenty of experience in the buy-to-let and build-to-rent markets. She has more advice and tips to share with landlords and you can find her on Landlords TV on YouTube.

Your money is safe in our hands

All renters should be able to trust their agent to protect their money

A key part of any property agent’s role is to safeguard money on behalf of their clients, who should be able to trust that they are properly protected. At Ringley, we are a member of the RICS Clients Money Protection Scheme which gives all our customers peace of mind that their rent and deposit monies are in safe hands. Unfortunately, a small number of agents out there flout the rules.

So here’s a cautionary tale for anyone responsible for other people’s money. An Essex estate agent has been disqualified from managing companies for five years after she failed to safeguard £28,000 worth of tenants’ deposits and rent destined for landlords.

Jane Hipkin Russell’s residential sales and lettings agency went into liquidation in August 2018. Investigators from the Insolvency Service found that Hipkin Russell, as sole director, had failed to comply with legislation requiring all tenant’s deposits to be placed in a recognised scheme.

The company had no record of 11 tenants’ deposits totalling £12,000 that had been received between March and August 2018. Nor had deposits received between April 2017 and August 2018 totalling £20,000, been paid into a government-backed statutory deposit protection scheme.

In addition, the company collected just over £7,000 of rent from tenants between March and August 2018. This should have been paid over to the tenants’ landlords but had instead been spent on the general running costs of the business. In total there were more than £28,000 worth of losses to tenants and landlords.

We hope this disqualification will serve as a deterrent to rogue agents who bring the whole of our sector into disrepute.

Is your washing machine a fire hazard?

Do you have one of these? If so, check the model number.

Do you rent a home with a Hotpoint or Indesit washing machine? If so, read on…

Whirlpool has been regularly updating the Office for Product Safety and Standards on the progress of its washing machine recall programme. The company announced in December that half a million washing machines sold under the Hotpoint and Indesit brands in the UK and Ireland between October 2014 and February 2018 could be affected by a flaw with the door-locking system. This could lead to the machines overheating and posing a fire risk. Consumers were advised to log onto a dedicated website and find out how to check whether or not their machine is affected.

If this is you, here’s the latest data from the company, published last week. Under the recall, consumers with an affected washing machine are entitled to a free replacement or repair. Old machines will be removed, and replacements installed, at no cost to the consumer.

Since December, more than 1.7 million people have logged on to the recall website for more information and just under 125,000 have been found to have faulty machines.

In total

  • 44,437 machines have been replaced (free of charge)
  • 41,245 machines have been confirmed as not having the affected lock mechanism
  • 22 machines have been modified with replacement parts

The average time taken from a customer registering their machine with Whirlpool to having their issue resolved is just under a month.

Of the number of washing machines Whirlpool estimates are affected by the safety issue, only 31.7% have been registered. So landlords, if you have a Hotpoint or Indesit washing machine at your property, go to the website today and find out how to check the model number. If the machine is affected contact Whirlpool, who will resolve the issue. Renters with potentially dangerous appliances should also check with their property manager that steps are being taken to keep them and their families safe.

Landlords: how much are you giving back?

It’s official – landlords make a valuable financial contribution to local communities

Landlords get a lot of flack. The bad ones – who in our experience are very much in the minority – are given more than their fair share of column inches in the press. Even the Government often seems to be helping create an unhelpful ‘them and us’ culture in the PRS. So here’s a good news story for a change.

Letting Agent Today reports that mortgage lender Aldermore Bank has carried out new research, identifying how much of a financial contribution private landlords make to their local economies. The company polled 1,000 UK-based landlords to find out more and the results make interesting reading. Here’s what they found.

In total, buy-to-let landlords have spent a staggering £3.61bn on local economies across the UK in the last 12 months. More than 80% of landlords who need to repair or renovate their rental homes use a local company. On average property owners in the rental sector spent £1,443 in the last 12 months on plumbers, builders, letting agents and other tradespeople. And they all hired suppliers from the local community for most of their requirements.

Landlords spent the most on letting agents – around £900m in the last year. This was  followed by:

  • £442m on small-scale repairs
  •  £396m on plumbers
  • £375.4m on electricians
  • £377.3m on builders
  • £243.2m on cleaners

Almost a third of landlords responding to the survey said they are keen to actively support their local economy by using local tradespeople and one in four say they tend to be cheaper than big-name nationwide alternatives.

Using local suppliers equals peace of mind for many landlords: more than a third said they trust local tradespeople. Another 26% who don’t live close to their rental property say having local people do maintenance is reassuring because they know the area and add value.

So next time landlords are being given a hard time, they now have some solid financial ammunition to fight back with!