Recent headlines in the media suggests that landlords should start to look further afield for higher yields.
Whilst London and the South East continue to experience significant increases in capital gains, landlords looking for higher yields could do well to consider looking further afield at lower value properties elsewhere in the country.
In all price brackets, rental properties outside of London offer highly attractive investment opportunities when price, yield and stamp duty tax are considered equally. Buying multiple properties – particularly in the North East and North West – will often generate the same or better rental yields, while demanding as much as 50% less stamp duty, compared with one property in Inner London that costs the same.
It can also be argued that multiple properties instead of owning a single one hedges the risk. If you own one high value rental property and it’s void, you may struggle. However, if you have multiple lower value properties and one of them is void, the rental income from the others will help support the mortgage payment on the void property until a new tenant is found.
Lower value properties can typically achieve higher yields, which is why many landlords look for properties below the £250K mark.
This chart shows how much a landlord can achieve for that in different parts of the U.K.
It is worth noting that properties under £40K do not attract any form of stamp duty or the 3% stamp duty surcharge, however these properties may be in areas with social issues and large tracts of social housing, so it’s important to do intense due diligence on any area you are considering.
In a recent interview with Vanessa Warwick of Property Tribes forum, Vanessa and our M.D. Eric Walker, discussed that increased legislation may mean more landlords will turn to lettings agents for support, and clearly, a “long distance” landlord may find it impossible to manage a rental property effectively without using an agent:
As Eric mentioned, most landlords only own one property, and very often this is close to their own home.
Landlords looking to increase their yields by investing further from their area, may be put off from doing so by management worries. A reputable agent like Northwood – with offices throughout the U.K. – can step in and take away that hassle.
After all, you don’t want to have to make a round-trip of 200 miles to find that a light-bulb just needs changing – yes – it has happened!
Our Guaranteed Rent service is very popular with long-distance landlords as it allows them to simply “let and forget”.
It is also popular with landlords who are forced to become long distance, not by choice, but through circumstance.
We recently received this wonderful testimonial from a landlord who was forced to move away from their home and called on our Exeter office to take over the management of their rental property:
“I let my house through Northwood for 9 years and their service was faultless. Having moved away from the area, I always felt confident that the team at Exeter would take care of everything, leaving me to be a worry and hassle free landlord.
The team were always highly professional, but also very friendly and helpful. When I came to sell my house, my experience was exactly the same.”
Once you have chosen a town or city where you want to invest, our offices across the U.K. are pleased to advise long-distance landlords on such issues as tenant demand, best type of property to choose, best area etc. You are welcome to leverage their local knowledge to ensure you choose the right property.
They may even know of a landlord wishing to sell a tenanted property, meaning that you have income generation from Day One, along with a track record of the tenant paying rent, and a smooth-running tenancy.
All our offices are pleased to have a no-obligation chat in this regard, so feel free to contact them for advice.
When it is impractical to visit your investment in person on a regular basis, you need to know that a lettings professional is looking after it for you, ensuring that the property is compliant, and that maintenance and repair issues are attended to in a timely manner. Our landlords often say that we look after their properties as if they were our own!
We look forward to welcoming you to one of our local offices very soon!
To find your local Northwood office, please click >>> here.
Northwood is one of the largest and most recognised estate agents in the U.K. and the leading supplier of Guaranteed Rent to give landlords complete peace of mind.
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