Buy to let yields on the rise!

- Tue 26 Nov 2024

Over the past year, the UK rental market has seen significant shifts, with rental yields experiencing a notable increase. For buy-to-let property investors, this offers a compelling opportunity to capitalise on these higher returns by expanding their portfolios.

Rental yields - essentially the income generated by a property relative to its purchase price -have seen an upward trend. In the South West, rental growth has outpaced house price increases as the latter have been falling, providing landlords with more rental income for each property. This means that the income generated from renting out properties is more lucrative than in previous years, improving cash flow and increasing overall returns.

Rental demand has remained robust. Many people are choosing to rent for longer periods. For buy-to-let investors, this trend suggests a continued need for rental housing, ensuring steady demand for their properties.

While rental yields are important for generating income, capital appreciation - the increase in property values over time - remains a key factor in long-term investment success. As rental yields rise, it suggests that there is an underlying demand for housing in the region, which often correlates with potential for capital growth. The house price forecast over the next 5 years remains positive with suggestions of 20% commonly being muted.

Many investors have turned towards modern housing or brand new housing, where tenants often benefit from lower running costs and therefore a small increase in rental value will reflect that, added to with less maintenance means a better net return and also less day-to-day issues.

Over the last 5 years it has been notable how many landlords are looking to reinvest in their older properties to enhance their appeal and further increase the rental income they generate. With the Renters Reform Bill due to be in effect next year, Landlords have been taking advantage or any void periods between tenants by investing in improvements for the longer term, whilst also enjoying increased rents by offering higher spec homes.

Younger generations are delaying homeownership due to the affordability challenges in the housing market, while families are increasingly seeking larger rental homes due to lifestyle changes, such as hybrid working arrangements. This continued demand for rental properties ensures that landlords have a steady tenant pool, which can result in low vacancy rates and stable rental income.

Bradleys Property Rentals can advise on rental returns and demand for any properties whether selling via Bradleys Estate Agents or other companies. With a transparent fee structure and no hidden charges, Landlords seeking a professional service that will ensure their investment is well looked after. Contact your local Bradleys team for individual help or advice.

If you are considering becoming a landlord, why not check out our new landlord guide.

Buy to let yields on the rise!

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