Britain’s buy-to-let market showing early signs of a slump
- Interest from investors fell 27% last month compared to a year earlier
- Areas where rental yields are strong include Durham, Rightmove says
- Average monthly rent in London now stands at £2,021, findings say
Since the beginning of April, a 3 per cent stamp duty surcharge has applied to purchases of buy-to let properties or second homes.
But investors still willing to take the plunge should consider areas like Durham and Merseyside if they want to get the best rental yields for the year ahead, the property website added.
Sam Mitchell, Rightmove’s Head of Lettings, said: ‘This waning of interest definitely seems to predict a slowdown in the buy-to-let market, but what’s not yet clear is if this will only turn out to be a short-term pause.
‘It could be that some investors are waiting until the tax changes have some time to bed in before they review their business and continue to make purchases.
‘If this removes some of the competition for smaller properties then it could spell good news for many first-time buyers with a deposit ready as they may find now is the ideal time to make a move.’
Outside of London, areas where rental yields could be strong this year include Durham and Merseyside.
According to Rightmove, the four top locations for best yields are all in these counties, with Peterlee in Durham the highest at 9.1 per cent, followed by Bootle in Merseyside at 8.6 per cent. Birkenhead offers a yield of 7.8 per cent, with Stanley in Durham at 7.7 per cent.
Mr Mitchell said: ‘These areas where you can buy a two bed property for around £60-70k seem to offer a sound investment as long as the demand is there from tenants, so it’s worth speaking to local agents about what the rental market is like.
‘Whilst the highest demand for rental properties is often in the South and the East of England, this quarter’s data shows demand is growing in Manchester in places like Ashton-Under-Lyne and Stalybridge so they’re worth considering this year as well.’
Greater London saw the biggest jump in rental costs in the past quarter compared to a year ago, rising 1.3 per cent. In the North West, rents rose by 1.1 per cent over the same period, while falling by 0.1 per cent in the South East and East of England.
In London, the average monthly rent now stands at £2,021, Rightmove said. In the North East, by contrast, the average monthly rent is £538.
With demand from home-hunters reaching an all time high in the last few months, the pause from investors could give first-time buyers a better opportunity to make a move, the report suggests.
Data published by the Office for National Statistics last week revealed that 6 per cent of household in the UK receive income from rented properties, a figure that has tripled since the 1980s.
Source: Daily Mail
