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  • Property Yields

    Landlords should go on a yield hunt.



    Lots of headlines in the papers this week that landlords should be looking far beyond London and the South East for yields.

    Buying multiple properties - particularly in the North East and North West - will often generate the same or better rental yields, while demanding as much as 50% less stamp duty, compared with one property in Inner London that costs the same.

    We discussed this on Property Tribes a while back:

    Deposits - one high value property or two lower value ones?

    This chart shows what you can achieve for £250K across the U.K:

    Source material

    Commentators are suggesting we will see the rise of "cross-country" landlords -  professional landlords who live in one city, but rent out houses in other cities across the UK.

    Cities like Brighton and Southampton are becoming more popular with commuters thanks to the transport links into London, and developments like HS2 will prove an additional boost to areas in the Midlands and beyond (although HS2 is now in doubt).

    From a risk perspective, having mutliple properties is lower risk than having one property.  If your sole high value property is void, you are left paying the mortgage.

    However, if, instead of one high value property, you had several lower value ones, if one was void, the rental income from the others would help support it until you found a new tenant.

    Related content:

    Top 10 towns/cities to invest in under £200K 

    The 10 best U.K. towns or cities to invest in for under £50k

    Southampton produces highest BTL yields in U.K. but Northern towns dominate overall.

    Investment in railway stations signals growth

    Crossrail's effect on London housing & property prices

    CrossRail 2 - affect on property prices?

    Cheapest property prices within the M25 

    South East set for property boom!

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    Thats why I invest in Leeds & Bradford.

    Spending £500,000 in Bradford would secure a landlord five two-bed properties with an average rental yield 40 per cent higher than a typical one-bed flat costing the same in west London, while paying almost 50 per cent less stamp duty. (Source: https://www.lettingagenttoday.co.uk/brea...don-and-se )

    ONE THING I certainly hesitent to advise buying properties a vast difference away from your location, unless you are very confident in the Letting Agent.
    What I realy hated - even as a letting agent in Leeds/Bradford managing properties on Doncaster & Mansfield was (an hour there and hour back wasted in car) to turn up to find the Electric Issue was a Light Bulb, or Perspective Tenants did not turn up, or ASBO issues, etc.. etc..

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    THIS PROPERTY TRIBES ACCOUNT IS NO LONGER USED. DO NOT SEND PRIVATE MESSAGES.

    YOU CAN REACH ME AT BESPOKE FINANCE for HMO Mortgages, Cheap Life Insurance and Limited Company Buy-to-Let on 08009202001

    Good point about the problems of long distance landlording Adam.

    See - 10 reasons to buy investment property within a 10 mile radius of where you live. 

    A reputable, accredited lettings agent is vital for long distance landlords.  They can fully manage the property and deal with the day to day issues.

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    Agreed, you need to find a good, reputable agent...but even then they are never going to run your property as well as you would youself.

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    True Phil, but our guide to finding a reputable lettings agent goes a long way to solving that problem. Smile

    How to vet a lettings agent ... 12 questions to ask 

    Also, many amateur landlords are not up to speed on regulation and compliance issues, so using a lettings agent can actually mitigate risk in these areas.

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    My first thought on looking at the chart was why would anyone go for such low yields, and I do mean the highest shown in that.

    Decent 2 bed terraces around here (7 miles from the centre of Manchester) cost about £90k and will rent for around £500 a month.

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    Good to know what can be achieved in your local area Peter.

    Hopefully other landlords will come forward and share their local yields so that we can build up a "yield map" of the U.K. Smile

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    I am trying to work this out in relation to my own property.   Years ago I worked in offshore investment and used to be able to calculate dividend yields.   Can't remember the formula now.  

    Trying to sell my former 2 bed home which I let out for a few years in an accidental landlord situation.  Valued at between £68,0000 - £70,000 it is currently up for sale by auction.  Doesn't need anything doing to it beyond personal cosmetic choice eg. no refurb/building required. In fact is ready to move into.  

    Agents state the rental value is £400 - £425 pcm an is suitable for a variety of occupants. I can be quite flexible on price.  It didn't go first time round so am considering adjusting the starting price.  Can anyone give me an idea about a price point that will make this an attractive proposition based on yield?

    Thanks in advance.


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    I would have thought that it is worthwhile retaining the property

    After all you have absorbed all the costs of purchasing etc

    Renting it out must surely make economic sense!?

    You aren't going to lose anything by retaining the property

    Capital growth admittedly you'll struggle to attain

    But even a little bit of positive cashflow is better than selling the asset cheap

    Of course the issue you will have is that most of the tenant demographic will be on HB

    Which is very risky

    There will be RGI for HB soon and this would make such HB tenants effectively risk free as far as rent defaults go.

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    It was never bought as an investment in the first place and after my last experience I don't feel letting it out is for me.  I am not on the best mortgage rate on the SVR and my circumstances now would not allow me to get a better one.  I have had no problem attracting intererested tenants who work and even if they are HB I don't think Oldham is as problematic in covering the rent as other areas. I will start looking that up.   There seem to be a number of schemes in this area that I can utilise such as guaranteed rent, that I have found out about on here.   I think I will have to set a limit and if it is not sold by autumn I will re-let it.

    I only wish I had not gone for the auction method now as I stupidly did not realise that the massive fees were not part of a deposit.  £5000 for the buyer to pay just to buy it seems a massive barrier to the price I can achieve.  It will cost me about £360 to come out of the auction contract now.  I could just let it run till June 16th or whatever it is and then put it on the open market.   I can't decide which to do at the moment.   It could be a real bargain for someone and return me a decent amount too but with £5000 to factor in I do not see it working that way for either party.

    You live and learn I guess.




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    I am in Tameside (Oldham's neighbour to the south). I went to school in Oldham.

    Where in Oldham is your house? Is it near a Metro or train station?

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