With growing hostility and criticism from the media, coupled with financial turbulence, it's no wonder there are so many unfair perceptions of the buy to let market.
The private rental sector provides valuable and typically good quality housing to tenants wanting the flexibility of renting, and with the right property in the right place, with the right tenant and the right price, can still be financially rewarding.
1) Capital returns are good
New figures from the Halifax show that on average, UK house prices grew by 20.4% between January 2020 and December 2022, up by £48,620 from £237,895 to £286,515. We doubt that same level of growth will be seen in the next three years but long-term capital appreciation has been consistently good for bricks and mortar.
2) Rental returns have been strong
Reports from ARLA PropertyMark have shown that 74% of lettings agencies have seen month-on-month rental increases, despite the reluctance expressed from landlords.
3) Little prospect of rental demand slowing
We're seeing a perfect storm of increased demand and lower supply, with many Newcastle students and tenants competing for homes, particularly larger stock and HMOs. This is leading to record rental increases, however, this shouldn’t be a cause for concern as when letting to students, tenancies usually last for 12 months so any incremental changes can be made during the changeover period in line with market expectations.
Buy To Let may be more of a challenge than before but it’s still worthwhile as a long-term investment option. For many investors, it’s still appealing.
For more information, or if you would like to discuss renting or investing with us, call 0191 243 1000, or visit our Percy Street Office.