Returns up for buy-to-let investors

Monday, 31 March 2008 12:00 AM

Buy-to-let property investors have seen increases in their average returns during the first quarter of 2008, according to the quarterly Association of Residential Letting Agents (ARLA) review.

The average return - including capital appreciation and rent - on a geared investment now stands at 21.7 per cent, up 0.27 per cent, whereas returns on cash purchases average 10.91 per cent.

ARLA also finds flats show a marginally higher return than houses, except those located in the north of England.

This quarter, the number of buy-to-let investors reporting a significant impact on the rental market due to immigration has increased by nearly ten per cent since the question was last asked at the end of 2007.

This trend, along with increased demand from renters waiting for clarity over the future direction of the housing market, has ensured nine in ten investors have no intention of selling property should house prices fall.

Indeed around half, 46 per cent, of all investment landlords report their intention is to buy further property during the next twelve months and the average life expectancy of their investments remains unchanged, at close on 17 years.

"There can be no doubt from these figures that buy-to-let landlords are well aware of the opportunities but behave with caution. In fact, caution has been the watchword in the buy-to-let market since its inception," said ARLA operations manager, Ian Potter.

"Buy to let remains the sustainable option for housing."

According to ARLA, the average portfolio for a buy-to-let investor contains just fewer than seven properties, although half of all respondents only hold one or two properties.

The most likely buy-to-let purchase is a property between 50 and 100 years old in good condition, whereas the least likely purchase is of properties that have never been occupied or bought off plan.

Tags:
• uk property news