Saturday, 16 December 2017

To buy-to-let or not to buy-to-let? The big question

THERE is a general perception among the public that the rental market is extremely buoyant and therefore that investment within

THERE is a general perception among the public that the rental market is extremely buoyant and therefore that investment within it will generate a decent return, writes Jacky Hayler.

Whilst this is certainly accurate, the return expected needs to be quantified before an investor makes the expensive decision of whether or not to invest.

There is an inordinate amount of literature available, but speaking to a property investment and lettings expert such as Savills can pay dividends both in time and money. Ali Bird, an associate director at Savills in Henley, said: “Firstly, investors must consider the reasons for investment — either for the property’s capital growth or for the monthly income it generates. This will impact on property type and choice of area. Both of these elements will be the key deciding factors which will determine rental yield.

“On average, one can expect the net yield in our area to be around three to four per cent. Currently demand in Henley and its environs is outstripping supply for good family houses ranging from £2,200 per month to £3,500 per month, with very little selection available at the upper end of this scale.

“In terms of gross yield, these properties would cost circa £900,000 and between £1.2m and £1.5m to purchase. The latest forecast from Savills research forecasts capital growth of 19.5 per cent in properties valued between £500,000 and £1.5 million over the next four years.

“However what many investors fail to take into account when considering buy-to-let are the upfront costs required which, naturally, eat into the rental yield.

“We would be delighted to offer our expert advice.”

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