Why Buy to Let is Booming.
According to lettingagentinleeds.com, the Leeds City Centre residential market is currently at peak occupancy, with many letting agents reporting portfolio occupancy rates of 99% or above. The article goes on to state, levels of rent are at the highest they’ve been in the past 7 years, and due to lack of available stock on the market, they’re re-signing their contracts for longer periods of time.
With a lack of new stock coming to market in the city centre, property prices will inevitably increase making it even harder for first time buyers to purchase in these locations. Those that do purchase in the centre of the city, will likely purchase ex-rental properties – further reducing the number of lettings properties available.
As a result, buy to let investors are increasing in the city of Leeds and surrounding areas, such as Bradford. Property prices look set to increase in line with demand and as a result, now is an exciting time to purchase a purpose-built buy to let, city centre apartment.
To make a buy to let worthwhile investors should be looking for exciting yields or around 7 – 8%, affordable prices, and splitting funds to increase portfolio size (i.e. purchasing 2 x 1 bedroom apartments, rather than 1 x 2 bedroom apartment), this reduces your risk of void periods.
Purchasing a property for investment can be a very easy way to generate a profitable income from a tangible asset, which is why many with the funds available choose to invest in this market. Investment properties generally come with a certain level of responsibility, however there are ways to reduce the risk and workload involved with owning a buy-to-let.
- Look for purpose built properties. Those that are managed for you will ensure that you save a great deal of time and money furnishing a property and finding tenants for it. Letting the property out further incurs fees and until the tenant moves in, you may be liable for council tax, ground rent and bills.
- Think about where you purchase. City centre developments are seeing significantly increased demand due to the rising costs of getting onto the property ladder and the increasing occurrence of “generation rent”. These centrally located properties generally demand higher rents, and experience fewer void periods, ensuring both rental income is maintained, and capital appreciation potential is exploited.
- Affordability. Of course, every purchaser is mindful of their funds being invested into property. Purchasing single apartments within a fully-managed development is an excellent way of reducing spend within a property, without reducing your potential yields. Rather than spending hundreds of thousands of pounds on an HMO (House of Multiple Occupancy), individual rental apartments can be purchased for less than £50,000 – making it a very affordable option indeed, especially if you’re looking to make your first investment.
It is now widely recognised that the private rented sector has a crucial role to play in both the UK housing market and the economy. With more single person households, lack of affordability and an increasing average age for first time buyers, buy-to-let is a thriving industry in the UK and offers an excellent proposition for investment.