Anyone considering entering the world of buy-to-let might be feeling a little fearful of the much-publicised new regulations for landlords, and wondering whether rental property is actually a good investment at all at the moment.
The announcement that new rental properties will need to have an Energy Performance Certificate (EPC) rating of C by 2025 is said to have left around half of the UK’s landlords considering selling up rather than going through the expense of upgrading and retrofitting their properties, especially when they are still reeling from 2016’s 3% increase in Stamp Duty on second properties. However, at the same time a large number of existing landlords are also considering expanding their portfolios. Mortgage lenders have recently opened up a new swathe of very attractive deals for buy-to-let, with some lenders even removing minimum income thresholds for buy-to-let investors. And despite the recent interest rate increase, there are some incredibly competitive deals around.
Rents are looking to remain strong for 2022, having grown by a total of 7.9% across Britain in 2021, with most of the increases seen outside London. So it would appear that getting the right location is an important factor to consider when looking at buy-to-let. Research by Track Capital shows that the two most promising postcodes in terms of rental growth are in Nottingham, with both NG7 and NG1 clocking up rental yields of over 11%, closely followed by other student-dense areas such as Manchester and Leeds.
And while London properties might not deliver the UK’s highest yields, they certainly make good investments. As Carl Burgess of Winkworth in Shepherds Bush says: “With uncertainty around the world, London property has always been considered a safe haven for investors. Property ownership is considered one of the safest places to put your cash and with the rental market in London now returning to normal and rents rising again, we expect to see an increase in the number of people looking to buy properties to rent in the capital.”
When investing in buy-to-let, it’s important to do your research. If you’re deciding to invest in an area you don’t know on the basis of its impressive average yields, it’s worth being extra careful. Make sure that your property isn’t lacking exactly the elements that make properties in the area popular – that it’s not too far from the university, for instance, if your market is students – or close to stations, say, if your market is commuters. Another factor that’s more important than ever is getting the right type of property. With more than a quarter of people set to continue working from home at least part of the time, properties with decent sized living spaces and properties with gardens are most in demand by prospective tenants.
So will 2022 be a good year for buy-to-let? Without a crystal ball it’s impossible to say for sure, but with tenant enquiries on the up across the board, the demand is clearly there. Investors take note.
For advice on how to be a good landlord, read our blog here. Should you like further information, please contact your local Winkworth agent.