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Rocketing rents and rising regional growth create perfect storm for buy-to-let investors

March 21, 2014Article by Ray Withers

The expansion of the UK’s private rented sector, which according to the CBRE Regional Letting Outlook now accounts for 3.9 million households across England and Wales, has already led to a boom in buy-to-let investors becoming landlords. But is seems that the sector is set to grow bigger still, with rocketing rents and rising regional growth creating the perfect storm for those looking to make money through buy-to-let properties.

Rents on the up

The latest rental index has shown that advertised rents in the UK have reached their highest level since the third quarter of 2012, with nine of 11 regions seeing price rises. Regional growth is credited with being the cause for the rise, with Britain’s national average asking rent now at the highest level it has been (£923 per month) since Move with Us began recording data two years ago.

The data has pleased both existing landlords and those considering expanding their investment portfolio to include a buy-to-let property. Ray Withers, Chief Executive of award-winning property investment company Property Frontiers, comments,

“The number of rental households has increased by one million in just five years, as more and more young professionals turn to renting when they find they have been priced out of home ownership. It’s a trend that seems to be accelerating – the latest census data showed that of new households, over 77% were in the private rented sector.

“Now, with rents on the up, we’re seeing new investors keen to enter the market. Demand for Property Frontiers’ prime city centre buy-to-let apartments has been intense, both from domestic purchasers and those looking to invest in the UK from abroad.”

High level investment

High net worth investors in particular have helped to buoy up the sector and are likely to continue to do so over the coming years, with the deVere Group investor confidence survey reporting that 57% of respondents were feeling bullish about the next year’s investment outlook and that 77% were “committed to investing more over the 12 months.”

The survey revealed that high net worth investor confidence is now at its highest level since the economic crash of 2008. Meanwhile, the Council of Mortgage Lenders has announced that gross mortgage lending in January 2014, at an estimated £15.5 billion, was a third higher than the same time a year before. Buy-to-let investors are thought to be responsible for a large portion of the increase.

A tale of two cities

Regional growth is perhaps the most exciting part of this perfect buy-to-let investment storm. While the CBRE Regional Letting Outlook reported the moderating of rental growth in London, it noted that,

“The opportunities in the regions are picking up. Rising populations coupled with improving economic conditions in the regions, are enhancing rental growth prospects.”

The cities of Birmingham and Liverpool stood out from the report due to their interesting investment potential in this respect. In Birmingham, where Property Frontiers is offering luxury city centre apartments from £95,000, with an early bird discount of 10% before 1 April 2014, private rented households were found to account for 17.9%, with an average gross yield of 6.3%. Property Frontiers is predicting realistic yields of 9% on its studio, one and two bedroom apartments, with developer underwrites available.

Over in Liverpool, where Property Frontiers is offering high-end waterfront apartments as buy-to-let investments from £82,500, with 8.5% gross yield guaranteed in year one, private rented households accounted for 23.4%, with average gross yields of 7.2%.

Given this timely combination of factors, along with the wide-scale recovery of the UK housing marketing creating the potential for capital growth, it’s no wonder that buy-to-let investors are flocking to the UK’s regional cities in ever-increasing numbers.

For more information on high yielding buy-to-let opportunities in the UK’s leading regional centres, such as Birmingham, Bradford and Liverpool, contact Property Frontiers today or call +44 1865 202 700.


Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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