UK rental properties generate impressive returns
Landlords of residential rental properties in the United Kingdom are continuing to make impressive annual returns, despite a slump in Britain’s housing market and increasingly acute economic concerns. According to the most recent statistics, published by the IT Contractor Portal, those who have invested in buy-to-let properties have, on average, enjoyed annual returns of 13.6 percent. This figure takes into account both the monthly rental income that the given property has generated, as well as capital gain.
Those landlords who own smaller residential properties appear to have been the most fortunate, in terms of annual yields. Both terraced and detached houses now offer a premium yield of 6.9 percent and these appear to be more popular than flats in larger rental properties. The main reason is that a growing number of young Britons are delaying the purchase of their first home due to the instability in the housing market and the difficulty of obtaining mortgages on favourable terms. As such, they often choose to rent terraced or detached houses, rather than smaller flats.
Residential landlords are profiting from the fact that an increasing number of first-time buyers are delaying home purchases, since demand for rental properties remains very strong. This high level of demand also translates into rental rate increases through much of the UK. In fact, according to the most recent statistics, monthly rents increased by an average of 9.3 percent compared to figures from 2007. Most of these increases, however, came from terraced and detached house rentals.