The company reports an average national rental yield for 2003 of 5%, a reasonable return considering the stable market. The North enjoyed average returns of between 5-7%. The South performed less well with central London returning average yields of 3.5% with Greater London 4.2%.
Said Judienne Wood, National Director of Bradford & Bingley Lettings: "Confidence in the property lettings market has grown throughout 2003, particularly in the north. After the Iraqi conflict the residential sales market picked up. However, this had a knock-on affect for rentals as many homeowners swapped ownership earlier in the year in order to rent for six
month or more, in the hope that prices would fall and they could return and buy at a lesser price than they had sold. These 'in-betweeners' bolstered the mid to top end of the rental market.
"First time buyers continued to be priced out of ownership throughout the year, choosing to rent for longer. Thus demand for one and two bedroom town/city centre property has remained strong."
Buy to let is here to stay
Buy to let has remained a favoured investment vehicle. Many investors see bricks and mortar as a solid alternative to stocks and shares, especially in light of the uncertainty of the pensions market.
Judienne continued: "Although the stock market has been gaining strength over the past nine months it has remained shaky. The number of new buy to let investors continued to grow at a steady pace as many choose to invest in property as an alternative way to fund their retirement."
National Hotspots
A number of hotspots have emerged over the past year. Activity in these areas has been largely centred around new build developments, especially those within walking distance of a town or city centre or waterside developments such as Glasgow Harbour, Nottingham's Castle Marina, Newcastle's Quayside and Southampton's Ocean Village.
Judienne comments: "Buy to let investors have shown keen interest in new build property buying into new developments and purchasing the property that has largely become unaffordable for many first time buyers. This has not only provided a great supply of property in desirable locations for tenants, but has also kept the new build sales market buoyant."
Looking ahead to 2004
Looking forward to 2004, Bradford & Bingley predicts a similar market to this year. However, it believes we may experience an increase in the number of corporate lets as the American economy picks up and the UK and European markets settle and begin to grow. Judienne commented: "Relocation agent activity has increased over the latter part of the year with many of our agents reporting marked growth in corporate tenants. Young
professionals will continue to be the mainstay of the rental market, the prospect of interest rate rises and increasing house prices have persuaded many would be buyers to rent for longer."
