Obviously the amount of rental income that one can expect to generate varies wildly depending on where you decide to invest. Fortunately, then, a report just released from Howsy shows how investors can make their money back more quickly after forking out that huge initial sum to acquire the property.
The property lettings platform’s data shows that those who set up shop in Scotland can expect to make the biggest incomes as a proportion of the property price, with 18 of the UK’s top 20 destinations in this regard based north of Hadrian’s Wall.
Glasgow topped the charts with average annual rent of £10,596 accounting for 7.7% of the average property price of £137,952. Compare this with the 4.9% that covers the whole of the UK, created by an average yearly rent of £11,436 and a mean home value of £234,370.
|
Location |
Average |
Average |
Rent as % of |
|
Glasgow |
£137,952 |
£10,596 |
7.70% |
|
Inverclyde |
£105,984 |
£7,476 |
7.10% |
|
Midlothian |
£187,531 |
£13,008 |
6.90% |
|
West Dunbartonshire |
£109,087 |
£7,559 |
6.90% |
|
Burnley |
£84,598 |
£5,496 |
6.50% |
|
East Ayrshire |
£101,042 |
£6,336 |
6.30% |
|
Falkirk |
£129,803 |
£8,124 |
6.30% |
|
Dundee |
£127,379 |
£7,920 |
6.20% |
|
Clackmannanshire |
£130,940 |
£8,124 |
6.20% |
|
Belfast |
£133,620 |
£8,280 |
6.20% |
|
Moray |
£145,701 |
£8,820 |
6.10% |
|
Aberdeen |
£148,021 |
£8,820 |
6.00% |
|
Renfrewshire |
£126,620 |
£7,476 |
5.90% |
|
North Ayrshire |
£108,525 |
£6,336 |
5.80% |
|
South Lanarkshire |
£129,643 |
£7,536 |
5.80% |
|
North Lanarkshire |
£109,094 |
£6,339 |
5.80% |
|
County Durham |
£103,320 |
£5,916 |
5.70% |
|
Blackpool |
£109,558 |
£6,252 |
5.70% |
|
Na h-Eileanan Siar |
£130,726 |
£7,416 |
5.70% |
|
Hyndburn |
£100,019 |
£5,652 |
5.70% |
|
United Kingdom |
£234,370 |
£11,436 |
4.90% |
Hold up!
Hold your horses, though. Before logging onto Rightmove or Zoopla to buy something north of the border, buy-to-let investors need to remember that times are really tough right now as the government takes measures to free up properties for first-time buyers that are otherwise be used for rental purposes.
Sure, a shortage of available rental properties in many parts of the country means that landlords are generally speaking enjoying a steady upswing in rents. But a blend of rising tax liabilities, increased regulatory costs, and higher day-to-day running expenses means that the benefit of increased rental revenues is getting swallowed up.
Recent data shows that after the dust has settled, buy-to-let participants can expect to make profits of just £2k per year. Given the hard work (and the huge initial outlay) that landlords face, these represent pretty paltry returns.
Better property plays!
Why take the risk with an increasingly difficult investment arena when there are so many other great ways to get rich with London Stock Exchange-listed companies? Indeed, there’s plenty of property focused stocks that can provide you with some truly staggering income flows too.
Take Warehouse REIT and Urban Logistics REIT, for example, two providers of ‘big box’ warehouses and logistics spaces who stand to gain from the rampant growth in e-commerce. These two shares carry huge dividend yields of 5.8% and 5.5% respectively.
Or what about care home provider Target Healthcare REIT, a terrific defensive share that can look to Britain’s growing elderly population to drive profits in the years ahead, and which yields 5.7%? Assura and Primary Health Properties are also low-risk shares because of their role in the healthcare sector, providing primary healthcare facilities across the UK. These businesses offer yields just shy of 4%.
But if you want bigger yields you should pay the housebuilders close attention, as these firms stand to continue gaining from the country’s massive homes shortage. And I say this as holder of Barratt Developments and Taylor Wimpey, stocks which yield 7% and 10.2% respectively. Civitas Social Housing, meanwhile, is a great play specifically on the rising need for quality social housing. And this particular equity yields a meaty 6%.