Residential lettings report for investor landlords (Bradford & Bingley Estate Agents)

Citation

(2002), "Residential lettings report for investor landlords (Bradford & Bingley Estate Agents)", Property Management, Vol. 20 No. 1. https://doi.org/10.1108/pm.2002.11320aab.018

Residential lettings report for investor landlords (Bradford & Bingley Estate Agents)

Residential lettings report for investor landlords (Bradford & Bingley Estate Agents)

With current turbulent stock-market conditions, buying property to rent to boost investment portfolios could be the answer for more and more people. This is because letting property could provide a gross return of up to 10 per cent of its value with the added bonus of strong capital growth, reveals the latest Residential Lettings Report for Investor Landlords from Bradford & Bingley. (Returns are leased on the annual rent received as a percentage of the value of the property.)

The report also advises that the key to success in this market is buying flats rather than larger houses and picking the current property "hot spots" to invest in.

Yields vary, depending on property type and area. The most common type of property being let is a two-bedroom flat which offers returns as high as 10 per cent compared to 5 per cent for a four-bedroom detached house.

The average time taken to let a property from instruction by landlord to finding a tenant is four weeks, one week faster than in the Spring. National hotspots include High Wycombe and Horsham where properties are let, on average, in one week. Properties in Middlesborough, Southampton, Hove and Caversham are not far behind, typically being let in two weeks.

Although mortgage rates are at their most affordable for 40 years, property prices continue to rise. With most lenders relying on strict income multiples to determine a borrowers' ability to repay the loan, many first-time buyers are being priced out of the market, and so demand for rental property remains stable. Renting remains the most popular choice among the 25 to 35 age group, who account for 47 per cent of tenants. The majority of tenants are couples or friends sharing (46 per cent).

John Crossley, head of Bradford & Bingley Letting Agents comments:

Nationally, yields have tightened since our last report in the Spring. This is due to property capital values increasing which drive yields down. However, as global stock markets remain volatile, investors are looking at alternative opportunities and buying property to let is continuing to prove an attractive option within the vast array of investments now available.

With everyday dinner conversations turning to house values, and whether or not they are sustainable, landlords may be concerned that property prices are soon to slip. They should be assured that even if this does happen, tenant demand for rented property would most likely increase securing further investment benefits. As with all property related activities it is always important to seek advice. Within the buy to let market ensuring demand is sufficient in a location is key and a letting agent will be able to advise you accordingly.

Highlighting the popularity of residential investment, Bradford & Bingley's Independent Financial Advice arm, The MarketPlace, has seen a dramatic rise in the number of people taking out buy to let mortgages this year.

Rob Guy, technical director at The MarketPlace observes:

The fact that buy to let rates have, on average, fallen by over 1 per cent in the last year, may account for the rise in number of new investor landlords in the market. However, people are also realising that buy to let can be a first class investment and a very good supplement to pension planning. Inexperienced landlords should be aware of the risks and shop around for the best mortgage deals. Anyone thinking of taking out a buy to let mortgage should really speak to an expert such as an independent financial adviser, who will research the market and find thef products that best suits the customer's needs.

The MarketPlace is currently offering a new buy to let, stepped discount mortgage financed by Bristol & West with an initial rate of 5.75 per cent. The product is ideal for those looking to enter the market with minimal cost.

National and local information in the report is based on the last 20 lettings transactions within Bradford & Bingley's 72 UK lettings branches, all of which are members of ARLA

For advice on lettings or any of Bradford & Bingley's services call 0800 113333.