Buy-to-let – where can you get the quickest returns?

UK rents are going up. According to new figures from HomeLet, rents have increased by an average of 13.9% in five years. The average rent in the UK is now £941 a month, – an increase of £17 – on the same time last year. Rents in June increased in all 12 regions monitored by HomeLet, led by gains in Northern Ireland, where rents are up 4.7% year-on-year.

Also, rental yields are at their highest level for two years, according to the latest Buy to Let Britain report. The average yield now stands at 4.5% – the highest rate since the first quarter of 2017.

Buy-to-let: where’s the best UK location?

Great news for landlords, particularly those with buy-to-let property. They are under increasing pressure from the government in the form of additional tax, property reforms and new regulations – with more to come in the next few months. So research from Benham and Reeves could be required reading for anyone thinking of investing in the BTL market in the near future.

The report looks at the best parts of the UK to buy your BTL property. It ranks locations on the time it takes to recoup the investment on purchase and stamp duty costs, based on annual rental return. Benham and Reeves say Scotland is the now best place to invest. They claim annual rent is repaying stamp duty and average property prices in just over 17 years.

Northern Ireland comes out second, followed by England and then Wales. In Scotland, buying a rental home in Glasgow shows the quickest returns at 13.3 years, followed by Belfast at 15.8 years and Aberdeen at 17.8 years.

In England, Nottingham and Newcastle show the fastest returns. And in London, Tower Hamlets is the best location, closely followed by Barking and Dagenham, Newham and Greenwich.

But making a good return on a rental property is complicated. There are other things to take into account. Contingency budgets, capital growth and the impact of gentrification or other types of development on the location you choose must all be considered.

What this research really shows is that BTL isn’t the best way to make a fast buck. It’s a long term investment that needs careful thought. With so much changing in the market, only those who are prepared to stay the course – and understand the obligations and responsibilities of providing homes for tenants – should think about putting their money into rental property.

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