Halstead, Borehamwood and Brentwood make up the top three investor hotspots outside London, all seeing a total return on investment of over 25%.
Places in Essex and Hertfordshire make up seven of the top 10 investor hotspots, with Cottingham in Yorkshire being the sole appearance from the north.
East of England’s annual rental growth racing ahead of the other regions has helped contribute to this strong total return on investment, up 6.4% on last year compared to 4.5% nationally outside of London.
In the past three months rents have risen by 2.0% in the East of England, with only the East Midlands reporting a higher increase at 2.1%.
Sam Mitchell, Head of Lettings at Rightmove, commented:
“We’ve been reporting high tenant demand for rental property in Essex for a while now, so it makes sense that it should feature strongly in our new total return on investment league table. Investors and tenants who’ve been priced out of London and the South East have looked for better value areas in the East, and it seems they’ve both found a winning formula. For example, if you look at the top 10, six of the areas have average asking prices below the national average, making it affordable for buy-to-let investors. From a tenant affordability perspective the East of England’s average rent for a two bed is less than £900 a month, compared to over £2,000 in London.”
Rents in England and Wales are up 1.3% on last quarter outside London, as stock shortages of rental property in some of the more popular areas push up rents. In Greater London the affordability ceiling looks to have been reached, with rents up only 0.2%, compared to 1.6% in Q3 last year. The number of new rental properties is up slightly in Greater London which could help explain the much more muted increase.
Mitchell notes:
“We know the majority of investors purchase their property portfolio as a long-term investment, and as long as they buy wisely they can benefit from both growth in their property values as well as rental yield. Those landlords who bought in the East of England are seeing much higher returns on investment as the region leads the way for rental growth. But with a combination of such high returns for buy-to-let landlords and affordable prices for first-time buyers, demand for property is high and results in a stock shortage problem, as agents in these areas note.
“There’ve been concerns raised by the Bank of England about the impact of buy-to-let investors on the property market and the threat to the economy more broadly. This echoes the current government’s policy of increasing taxes, or lowering claimable allowances, for landlords. Yet it’s clear that if landlords exit the market in any great numbers we can expect rents to continue to increase further. It remains to be seen how much of an impact the new policy will have, but our report demonstrates that in the right areas and with proper advice and management, property remains an attractive investment.”
