Record Returns For Some UK Landlords

The North West, Scotland and Wales have registered record returns for landlords, particularly in the fourth quarter of 2007.

The latest quarterly report carried out by the Association of Residential Letting Agents (ARLA) is  an interesting review as it is one of the few surveys carried out well after the credit crunch began to bite.

ARLA’s report focuses on returns from properties across the UK. In the last quarter of 2007, the two areas which performed regularly above average were the North West of England, Scotland and Wales. The average rate of return on cash purchase buy-to-let investments over 5 years is 10.81% per annum across the country. However, in the North West the figure rises to 11.03% and in Scotland to 11.07%, the two highest in the UK.

Scotland and the North West also featured on top for gross annual rental yields. The nation’s average stands at 4.81% whilst in Scotland we see this figure rise to 5.23% and 5.29% in the North West.

The survey also reflected that 9 out of 10 of those polled had no intention of selling their properties for at least another 17 years. UK buy-to-let investors are in it for the long term, with only 1 in 12 landlords expecting to sell their investment in less than 5 years and only 2% in under two years.

Head of Operations at ARLA, Ian Potter, explains: “The rental sector is the lynchpin for all our housing requirements and needs continual investment from private individuals as it still suffers from a lack of investment from the institutions.”

Overall, the percentage of landlords who believed demand for rental property was higher than supply was the second highest since ARLA’s surveys began more than five years ago.  The figure has increased more than threefold, from 15% to 50%, in the last five years.

As a result of such encouraging figures, interesting property developments are underway in the UK with a view to creating more opportunities for the buy-to-let investor.   High demand for property in certain key economic areas like Leeds  has brought about new projects, such as Lumiere in Leeds, soon to be the tallest residential tower in the UK:  Designed by Philippe Starck and his award-winning Yoo project team, “The investment offers a fantastic payment structure with an extremely low entry level arranged especially for International Property Investment Network (IPIN) members.

Featuring outstanding architectural design, the Lumiere building really is an investment opportunity not to be missed,” explains Sara Romera, analyst at propertyshowrooms.com. “Although this is a city centre property investment, it has a low entry with only 10% to pay before completion, 10% estimated capital appreciation and 6% estimated rental yields with some units free from Stamp Duty”.

Source: Association of Residential Letting Agents (ARLA) http://www.arla.co.uk/