Tuesday, 17th June 2014

Reading nets buy-to-let investors increased returns

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Buy-to-let investors in Reading have seen the biggest increase in rental returns over the past year as young professionals move to the town from London, according to research by HSBC.

Yields are up by more than 12% in the commuter town, although Southampton took the title of the city where landlords stood to make the biggest monthly return.

Analysis by HSBC, based on figures from the Land Registry and website, home.co.uk showed that in Reading the average monthly rent is £950 while the average property price is £207,934, providing an average yield of 5.48%, up from 4.86% a year ago.

Just under a quarter of Reading's private housing stock is rented, the bank said, while in Brighton the figure is 28%.

"Landlords are reaping the benefit as young professionals say goodbye to capital living in favour of more affordable commuter towns," said Peter Dockar, head of mortgages at HSBC.

"Despite the inevitable increase in commuter costs associated with moving further out, many still feel it is worthwhile in order to save towards property deposits.

"House prices in these locations – while still out of reach of many first-time buyers – are relatively affordable for landlords investing in property and the demand from young professionals has pushed up rents and driven up the returns."

Recent figures from the Council of Mortgage Lenders showed that the number of loans taken out to fund buy-to-let investments increased by 46% over the 12 months to March as existing landlords added to their portfolios and new investors looked for better returns on their money.