Landlords
looking to invest in buy-to-let properties are still flocking to the capital,
as London sits at the top of a list of UK hotspots.
It's
closely followed by Birmingham and Bristol in the top 20 areas where buy-to-let
properties have been bought in the last year, according to data from Barclays
Mortgages. Nottingham, Manchester and Leeds also saw a big jump in demand.
London
landlords also unsurprisingly get the biggest monthly rental revenues, with an
average income of £1,900 per month.
Greater
London locations also pulled in substantial rents, with landlords in Harrow
getting an average of £1,402 per month, in Enfield getting £1,268 per month and
in Croydon landlords get an average of £1,262 monthly.
Outside
of the capital. landlords in Reading, Southampton and Slough receive the next
biggest monthly rent revenues.
However,
while the Barclays report highlighted rental amounts, it failed to drill down
into the yields on offer - rental return as a percentage of purchase price.
The high
price of property in London and the commuter belt means that yields on property
tend to be lower. Separate research by property lend-to-save
firm LendInvest, which used both rents and property prices,
showed the best places for returns as Birmingham, Ipswich, Liverpool and
Glasgow.
Barclays
compiled its data after analysing more than 5,000 of its buy-to-let customers
who purchased a property in 2014 or 2015.
It noted
that Birmingham has seen a ‘significant increase’ in the number of buy-to-let
properties purchased, potentially due to a new HS2 train line into London,
which is set to begin construction in 2017.
Popular
university towns such as Bristol, Nottingham and Manchester also continue to
feature high on the list, as well as greater London areas such as Slough and
Ilford. Plymouth,
which received a £90million investment pledge from the government earlier this
year, jumped from 212th in the list to 16th place.
As part
of the research, Barclays surveyed its buy-to-let property owners with
two-thirds of landlords describing the current buy-to-let market as ‘buoyant’.
In spite of this, one in ten are still planning to sell their property in the
next year.
|
BUY-TO-LET HOTSPOTS REVEALED: Top 20 areas by
volume
|
|
Rank (by volume of Barclays completed buy-to-let
properties)
|
Ranking in 2014
|
Town
|
Average rent in Q1 - Q2 2015
|
|
1
|
1
|
LONDON
|
£œ1,900
|
|
2
|
7
|
BIRMINGHAM
|
ϣ766
|
|
3
|
3
|
BRISTOL
|
ϣ877
|
|
4
|
17
|
NOTTINGHAM
|
ϣ639
|
|
5
|
18
|
MANCHESTER
|
£œ693
|
|
6
|
13
|
READING
|
ϣ1,169
|
|
7
|
47
|
LEEDS
|
ϣ703
|
|
8
|
6
|
SOUTHAMPTON
|
ϣ1,067
|
|
9
|
50
|
PETERBOROUGH
|
£œ649
|
|
10
|
19
|
SLOUGH
|
£œ1,045
|
|
11
|
48
|
GLASGOW
|
£œ601
|
|
12
|
5
|
ILFORD
|
ϣ1,252
|
|
13
|
4
|
HARROW
|
ϣ1,402
|
|
14
|
35
|
EDINBURGH
|
ϣ923
|
|
15
|
8
|
CROYDON
|
£œ1,262
|
|
16
|
212
|
PLYMOUTH
|
ϣ808
|
|
17
|
12
|
ENFIELD
|
£œ1,268
|
|
18
|
79
|
SWINDON
|
ϣ681
|
|
19
|
62
|
LUTON
|
ϣ754
|
|
20
|
28
|
MILTON
KEYNES
|
£œ873
|
|
Source
Barclays: Data based on
|
|
|
|
Andy
Gray, Barclays managing director of mortgages, said: 'It’s encouraging to see
home owners are still feeling confident about the rental market and view buy-to-let
as a valuable way to support their finances.
'Whilst
London still leads all things buy-to-let, areas like Plymouth and Peterborough
show there are some great value hot spots outside the capital city that are
worth investment as the economy grows.'
The
summer Budget earlier this month put forward a raft of changes for landlords in
the UK.
Chancellor
George Osborne announced a measure that could boost house prices by raising the
inheritance tax threshold by £175,000, allowing couples to pass £1million,
including their home, onto their children and grandchildren.
However,
the Chancellor also announced a cap on the valuable tax relief on buy-to-let
mortgage, which will be phased in over four years starting in April 2017.
Rather
than allowing mortgage interest income tax relief on rental income at a landlord’s
top rate of tax, investors will have it capped at the 20 per cent basic rate
tax level.
Additionally,
he announced the end of a policy which allowed buy-to-let landlords to
automatically offset ‘wear and tear’ costs from their taxes.
From
April 2016 only actual costs incurred can be offset.
