Things Looking Good for Landlords

Things are looking good for property investors after signs that the housing price falls are now easing off in many areas. Rents, that were seeing sharp decreases, are also getting more stable.

Agents are now seeing an increase in investors who are looking to buy a second home or add to their portfolio of property. Even those who only expect modest returns are attracted to buy-to-let property as a way of boosting their income.

In the second quarter of the year, the gross return on houses has increased since the last quarter from 4.8% to 5.1%. This is according to the Association of Residential Letting Agents, where the yield for flats has risen to 5% from 4.9%.

Housing analyst, Hometrack, predicts that gross yields could make it to 7% next year as cheaper properties are likely to continue losing value.

However, potential landlords should still think about many of the costs involved in renting out their property – which can take a large portion of their income. This may include income tax, maintenance, agents fees and more.

Smartlandlord estimates that these costs can take around 1-1.5% of all rent profits, even within using a letting agent. This is coupled with the fact that many landlords have been forced to lower their rent in recent months.

There are now signs that the market is improving, and letting agents claim fewer tenants to be demanding lower rent. Certain properties, including one and two bedroom flats in London, seem to be improving more quickly than others.