Buy to Let Property Prices
Rising property values and higher rents, landlords in the top half of the country are enjoying returns greater than those in the bottom half of the country.
In the North landlords spend an average just under £100,000 when buying an investment property, and in the North West, just under £130,000. The buy to let mortgages company reckons there landlords enjoyed returns per a year of over 25%, while landlords in the South had returns of upto 3%. An investor in the North who spent under £80,000 on a property in late 2004 would have enjoyed an annual increase in value of just under £20,000, plus rental income of over £5,000. That's an astonishing gross return of nearly £24,000 -31% of their initial outlay - since a few years before. In the North-West, landlords who spent £112,000 in November 1994 enjoyed a rise in the value of the property of £19,300, plus nearly £8,000 in rent - a total return of 24%.
By comparison, a landlord in the South-East who spent an average of just under £173,000 in late 2004 has seen the property drop by £10,000 in value while collecting annual rent of under £11,000. That's a tiny profit of £1,500, virtually no return at all on a substantial outlay. The figures suggest that landlords in parts of Southern England have been providing more flats almost as a social service in the last 12-18 months because their
profits are virtually non-existent. But many landlords buy with a view to owning for at least a decade, and they will hope to make decent profits later when the upward thrust in house prices is resumed.
Figures show a distinct North-South divide. Total returns, property values and yields are mostly higher in northern regions, most notably the North, while southern regions continue to see a modest decline in property values and yields. Landlords in the North are still seeing total returns of over 30%, compared to a much lower national average of just 7.6%.
The immediate future for Buy to Let hinges on interest rate movements during 2007 We are currently seeing a vibrant buy to let remortgage market, driven by high levels of consumer demand in 2004 (now remortgaging). There still is an opportunity for landlords to borrow money relatively cheaply.
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