How investors are going back to buy-to-let for a good return on their money

Renting has become a way of life for hundreds of thousands of young professionals. For many, it’s not a predicament they wish to be in. But it does mean that for those entering the buy-to-let market the chances of finding suitable tenants have seldom been better. 

With savers suffering dismal returns on their accounts, buy-to-let is once more a lucrative option. 

Tim King, at London-based estate agency Felicity J. Lord, says: ‘Buy-to-let investors were once wealthy investors using cheap credit. Now, they’re people in their 50s who have lost trust in banks and pension schemes and are looking for a decent return on their money.’

Let the good times roll: Buy-to-let once more appears to be a lucrative option for some

The figures certainly look appealing. There is huge demand for rentals among young professionals struggling to get on the housing ladder, many of whom have to rent throughout their 20s, 30s and beyond. The average age of a first-time buyer sits at 30, and older for those buying without assistance.

This week, figures from Countrywide, the UK’s largest lettings agency, revealed that the average rent in England, Scotland and Wales has risen for six consecutive months to hit £842 a month in April, up 0.8 per cent year-on-year.

 

The average yields — that is, the annual rent as a percentage of the price paid for a property — is a healthy 6.2 per cent. But that figure does not take into account mortgage payments or maintenance. And if you want a letting agent to manage the property they will charge a fee of about 10 per cent of the rent.

Investors keen to take advantage of the market must choose their property and tenants wisely. 

Young professionals are generally seen as more reliable tenants than students or families with young children, who are more likely to cause accidental damage in homes. But it’s vital to carry out identity, credit and reference checks before you hand over the keys.