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Buy-to-let yields rise as landlords increase rents

The returns made by buy-to-let landlords rose across the UK as investors increase rates to counter tax relief cuts, new figures show.

A raft of tax changes and the impending tenant fees ban is creating a perfect storm of financial pressures on landlords, leaving many with little alternative but to increase tenants’ rents to cover their costs.

With an average rental yield of 4.67%, the latest annual European Buy-To-Let League Table from WorldFirst shows that the UK now offers the 16th highest rental return in Europe, demonstrating a significant improvement on its ranking of 25th this time last year, when an average rental yield of just 4% was achieved.

Rents in the UK look set to increase further as demand for rental properties grows, but the number of homes coming on to the private rental market continues to fall.

According to WorldFirst, Ireland ranks as the number one destination for renal yields in Europe, with an average return of 7.69% achievable.

Jeremy Thomson-Cook, chief economist at WorldFirst, said: “Buy to let investors looking for the best rental yields in Europe once again need look no further than Ireland, taking the crown for the third time in as many years.

“Part of the reason for Ireland’s buy-to-let success is while average house prices across the country are on the rise, they still sit some way below the country’s 2008 peak. What’s more, only Malta, Luxembourg and Sweden have experienced higher population growth than Ireland meaning that rental demand continues to go from strength to strength. Add these two factors together and you have a compelling overall proposition for buy-to-let investors.

“While the domestic market has lost its lustre for UK landlords, our research clearly shows that opportunities remain across the European Union more widely. However, though access to this market is still good – it is anyone’s guess as to how much longer that will last.”

The research looked at how ten of Europe’s largest cities compare with regard to rental yield, and found that London (3.17%) currently ranks 9th out of 10, with only Paris (2.89%) lagging behind.

Dublin ranked top of the league table (6.46%), closely followed by Amsterdam (5.33%) and Warsaw (5.15%).

Thomson-Cook added: “For any landlord taking the plunge and looking to invest abroad, while the value of the pound might make the initial purchase price less palatable than it was a few years ago, collecting rent in a different currency could really pay off – particularly if you look further afield than your high street bank for the best exchange rates to bring that income home.”

Poll: Have you invested in property abroad?

PLACE YOUR VOTE BELOW

  • G romit

    Gross yields are increasing as Landlords are forced to increase rents due to punitive taxes being enforced by the Government (Sec.24) and Local Councils (licencing). Net after tax yields remain low or on a downward trend

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    Yes G romit and this will continue until renters finally get it that they are the ones that are being manipulated by a gov trying to appease the swing to the left.
    Message to tenants support us so we can support you but then again if you have a clean credit rating steady employment and a deposit saved for a house then you’ve nothing to worry about have you

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    I bet that the government's corporate housing provider friends (not affected by S24) are laughing all the way to the bank.

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    Every interest rate increase, service charge increase, maintence charge increase, in fact any increase on what a ladlord has to pay for his property gets immediatly passed onto the tenant. Built into all TAs.
    The council and government Muppets are clueless.

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    I agree. Scottish landlords are the hardest hit by SNP meddling and our rents are up by 3 times the UK average at 5.6% annual increase, despite our economy lagging way behind - again due to SNP incompetence.

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