He adds: “Yield is so closely linked to purchase price. Generally, the cheaper properties yield more, so the key is to look in cheaper areas whilst still ensuring that any property which you are looking to purchase has demand from well referenced tenants. Good schools, transport links and amenities are all key.”
Ultimately, buy-to-let remains a strong investment option over the medium to long term as it is a secure form of investment for both passive and capital growth, according to residential and commercial property investment specialist David Dunwoody from Vail Williams.
“Rental yields within London have stabilised recently and now that the general election is settled, confidence has increased somewhat. Foreign investment is still strong, for those with deep pockets, and a weakened pound continues to help,” he says.
“However, we have seen some overseas buyers suffer from lower than anticipated rental yields as a result of ‘blind buying’, where the properties bought off-plan some years ago when the market was stronger, fail to achieve the same value.”
Rental demand fuels lender incentives
At a time where more than half of the UK population are holding off until around the age of 34 to own their first home, the increasing demand for rental properties is not surprising, nor is the industry’s nose for an opportunity and lenders across the board are offering new deals and incentives in order to grab their piece of the buy-to-let pie.
Mr Stockwell says: “Many providers are continuing to offer enticing new rates and enhance their eligibility criteria to make it easier to access finance.
“Crucially, rental prices have picked up following a couple of years of slow growth, meaning landlords’ yields have increased in many areas. As always with letting property, location plays a big part in how well an investment pays off in the short and long term, and even in cities and towns that don’t offer strong returns, a closer look on a street-by-street level can unearth the perfect investment opportunity.”
Miles Robinson, head of mortgages at online mortgage broker Trussle, adds: “For existing landlords who are looking to refinance their portfolio, it’s worth considering one of the many competitive five-year fixed deals on the market, if that suits their personal circumstances.
“This would enable them to lock in a low interest rate and keep their commitments steady over those five years.”
Mr Robinson suggests it is also worth bearing in mind that tax implications for landlords are tightening and as a consequence, believes that limited company buy-to-lets might become more common this year.
