The UK’s top five investment areas and overal rate of return (capital appreciation and rental yield) (2004 - 2005) are:
Bath and South East Avon - 36.4 per cent
Kent - 34.4 per cent
Worcester - 32.7 per cent
Newport - 28.4 per cent
Torbay - 27.2 per cent
The BTL market is currently worth £84 billion and as many as 152,000 BTL mortgages have been taken out since January 2006, a three-fold (300 per cent) increase in the number taken out in 1998 (44,400).
Over the last 10 years, average weekly rents have increased by 37 per cent – 1.3 times the rate of inflation. Average weekly rents have increased from £75 to £118.
On average, BTL has consistently outperformed other investment opportunities. Since 2002 the average return to a FTSE100 shareholder stands at 6.9 per cent, compared with the average interest rate for savers of 3.9 per cent. In contrast, BTL investments make an average return of 11.25 per cent for investors (rent & capital appreciation against initial costs).
High house prices in central London have resulted in good capital appreciation for investors (217 per cent over 10 years). Buy-to-let investment in central London returns an average annual rental yield of 4.7 per cent compared with 5.9 per cent in Manchester and the North West.
Tim Hague, director of mortgages at Birmingham Midshires, commented: “The buy-to-let market has experienced consistent growth over the last 10 years. Research shows that buy-to-let investors plan to stay in the market for an average of 17 years and when you consider the potential returns from both the rental yields and capital appreciation, it’s easy to see why. More and more people now see letting property as an achievable investment and an important part of a balanced investment portfolio."
