Higher yields
New research has been undertaken to establish which type of property is ‘best’ for buy to let. According to SBA Property Management’s finding, terraced houses produce the highest rental yields of on average 5.37%.
The study (undertaken in London only), showed that flats came in a close second offering yields on average of 5.08%. These figures are gathered from house prices and private rental data published in August this year. However, London has always remained a closed ecosystem when it comes to the private rental market and its performance often isn’t reflected around the country.
Mortgages
Andrew Bailey, BoE Governor expects 4 interest rate cuts in 2025. With the average Buy-To-Let mortgage rate currently being around 5.5%, this could provide some relief after years of rising borrowing costs. Whilst lower rates might improve affordability in the sector, and potentially make refinancing more viable, the buy-to-let sector still faces unique pressures. These include increased regulatory costs, stricter stress testing, and changing tax rules, not to mention rising costs of energy, materials and labour.
Who are Landlords?
The changing profile of the landlord has become even more obvious over the past 3 years, with only 10% of landlords entering the PRS in the last 3 years (The Mortgage Works). The research also showed that portfolio landlords with 5 or more properties has risen year on year from just 5% in 2018 to 18% 2021. With recent regulatory changes, this seems like a trend that will continue.
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