Returns on Buy to Let Investment Outperform Other Asset Classes

Returns on buy to let investments have continued to outperform the majority of other major asset classes, with landlords earning an average gross rental yield of 5.3 per cent.

Despite cooler market conditions, rental yields have remained strong in the UK, with Northern England leading the way. Rents in the region have reached £513 per month, marking the country’s best returns, whilst yields stood at 7 per cent, topping the chart for the second half of 2016.

The data, from BM Solutions, found that other areas such as Northern Ireland and the North West also performed well, with yields of 6.5 per cent and 6.4 per cent respectively. In comparison, the lowest yields were found in the capital, at a mere 4.4 per cent. The South East and The South West also failed to achieve, each with yields at 4.9 per cent.

However, rents remained most expensive in Greater London at £1,591 per month. This figure stands at 45 per cent higher than the South East (£1,095), which is the next highest region. Figures for London are almost double the UK average.

Despite a slight market slowdown in the latter half of 2016, with transactions down 41 per cent year on year, a figure fuelled by tax changes and stamp duty rules, the buy to let sector remains healthy and continues to be an attractive investment when compared to other alternatives.

Head of BM Solutions, Phil Rickards, said: ‘Rental yields remain strong, still offering investors high real returns. Typically buy-to-let investors in northern areas tend to benefit from lower property values providing higher yields, whereas southern regions have the lowest yields given the higher housing costs. Demand for rental properties remains high and returns have remained strong in the past six months despite the challenges that have faced the market during that time.’

Password Reset
Please enter your e-mail address. You will receive a new password via e-mail.