Property-Investment
Your Free Guide To The Best Locations For Property-Investment
Property-investment is big business and professional landlords are always looking for the next best place to put their money and get a good return. In order to help, some lenders are compiling their own lists of the best places for property-investment, which may guide landlords in making their next buy to let decision.
For example, Birmingham Midshires recently collated data from the Council of Mortgage Lenders (CML) on the number and value of buy to let mortgages, as well as data on rents from the Department for Communities and Local Government and data on rate of return from the Association of Residential Letting Agents with its own data on property-investment by postcode area to give a shortlist of hotspots. According to the CML, Birmingham Midshires was the largest buy to let mortgage lender in the first half of 2006.
Property-investment is a long term proposition, with two main aspects driving whether landlords consider property for BTL. The first is the rental yield. This is how much they can get to rent the property on a monthly or annual basis. This is a medium term investment. The long term investment comes from the increase in the value of the BTL rental property, known as capital appreciation. Together, these two factors give an overall rate of return on an investment, which is usually expressed as a percentage.
BTL Hotspots
According to the lender's research, the top five places for property-investment in the last year, by postcode area were Bath and South East Avon (36.4 per cent rate of return), Kent (34.4 per cent), Worcester (32.7 per cent), Newport (28.4 per cent), and Torbay (27.2 per cent). The five best regions for property-investment are the North West (with a 5.9 per cent rental yield and a 12.7 per cent annual return); Greater London (with a 5.1 per cent rental yield and a 11.58 per cent annual return); the North East (with a 5 per cent rental yield and a 11.46 per cent annual return); Yorkshire (with a 5 per cent rental yield and a 11.46 per cent annual return); and the Midlands (with a 4.9 per cent rental yield and a 11.39 per cent annual return).
The outlook for property-investment is healthy, with weekly rents increasing by 37 per cent over the last ten years, from £75 to £118. This is 1.3 times the rate of inflation. The property-investment sector has outperformed other investment sectors with an overall average rate of return of 11.25 per cent. This makes property-investment look good compared to average returns for stock exchange investors of 6.9 per cent.
According to the lender, the investment market in the buy to let sector is worth £84 billion, with the number of buy to let mortgages in the first half of 2006 being more than treble those taken out in 1998, when the CML's records begin. With consistent growth and high rental yields in the buy to let sector, more and more people are getting into property-investment.
