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According to new research conducted by property firm, Savills, UK landlords have make more than £180 billion in capital gains since 2009. This is a huge figure, but with buy to let property ownership rising from just 4% in 2000 to 16% in the second quarter of this year, landlords are certainly benefitting from an era of cheap mortgage interest rates and high rents.
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The Buy to Let Sector is Booming
“It’s not surprising that the sector is booming with the impressive yields, capital asset growth and growing demand for rental accommodation,” says Peter Armistead from Armistead Property. “Manchester has seen yields rise by an average of 4-5 per cent over the last 12 months and demand is outstripping supply. It takes an average just 14 days to find a tenant and void periods are almost non-existent.
“An average residential property in Manchester is just £155,000, while a flat in a good area, costs as little as £120,000” he continues. “A property in Manchester can provide a 5 per cent minimum cash rental yield and a typical 12 per cent total cash yield, including 7 per cent capital appreciation. Demand for rental accommodation is strong and by comparison with other regions, housing is cheaper.”
Supply and Demand
In some cities, student demand is fuelling the lack of supply in the market, but even in non-student cities, there is a lack of affordable housing and super strict planning rules are preventing property developers from converting existing properties to residential. All this is causing the rental market to continue its trend of strong growth.
