UK no longer desirable for buy-to-let property investors as yields drop


The buy-to-let sector is facing an increasingly tough time as research shows the UKs ranking of the best places to invest in Europe drop considerably in just 12 months. The drop has been blamed on recent changes such as landlords having to absorb 3% stamp duty surcharges on new property purchases, a cut in buy-to-let mortgage interest tax relief. In addition to this mortgage lenders are asking for higher rent to cover mortgage payments and landlords who have more than four properties will find it hard getting finance from October 2017.

The information was put together and researched by WorldFirst, the payments company, who ranked the average yields available on buy-to-let investments (the rent as a percentage of property values) across Europe. Their findings concluded that the UK had dropped from 15th place in 2016 to 25th in 12 months. Buy-to-let yields in the UK fell from 4.91 per cent to 4 per cent in the past year. London and the South-East saw yields of less than two per cent despite having high property prices.

The story isn’t so gloomy further north where landlords can still make returns of 8-9 per cent if the property has multiple tenancy agreements.

As Brexit negotiations with the European Union have commenced and are ongoing, the pound has fallen to almost its lowest point for 30 years.

In other research by the Nationwide Building Society, due to recent changes in buy-to-let tax, one in ten landlords anticipate paying an extra £300-£500. A similar number expect to lose approximately £501 – £1,000 per year and another 4 per cent will incur extra costs of approximately £1,001 and £2,000.

WorldFirst economist Edward Hardy said: ‘The correlation between a country’s housing sector and the health of the wider economy is clear.

Investors looking for buy-to-let opportunities are considering putting their money into properties in Ireland where average rental yields are 7.08 per cent in 2017, up from 6.54 per cent in 2016.

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