Property investment strategies have been turned on their head in the wake of the pandemic. Old rules have been ripped up and new ones installed, which may make landlords re-evaluate their current situation.
Among the plans called into question are the validity of cities as safe bets when it comes to buy-to-let. In fact, private rents in some of the UK’s biggest city centres fell by up to 12% in the year after Covid first emerged, reports Rightmove.
Outmigration: cities fall out of favour
LandlordBuyer has noticed a new buzz word used to describe the exodus of people from urban locations – outmigration – and London is where the trend is the most acute. Research by Hamptons International found there has been a 31% decline in landlords investing in the capital since 2010, with those searching for higher rental yields buying furthest away from London at an average of 108.7 miles.
The agent also disclosed that during the first six months of 2021, Londoners purchased 61,830 homes outside of the capital – accounting for 8.6% of all buyers – which is a record-breaking figure for a half-year period.
Demand is down in urban locations
The escape to countryside or the halfway house – suburbia – has taken its toll on city centre rental demand. Further compounding the issue is professionals’ new found freedom to work from home remotely and a dip in corporate relocators.
Softer rents have also been noted in some university cities, especially where numbers would be swelled thanks to international students – leaving landlords little choice but to slash rents by as much as 20-30%.
Rental values have also dropped
During one recent analysis of annual figures, Rightmove found that rents were down in Edinburgh city centre by -10%, while rents in Manchester city centre dipped by -5.3%. Birmingham and Leeds didn’t fare much better, with decreases of -4.6% and -4.4%, respectively.
Protect profit with a new strategy
It’s widely known that profits from property investment are slim for many landlords and falling rental values of even -1% can create an unsustainable loss. For those who are experiencing falling rental demand and diminishing rental values in UK cities, it may be time to change course. LandlordBuyer can help bring a new plan to fruition. Why not sell property fast and try one of the following?
1. Chase better yields in other cities: it’s not all doom and gloom when it comes to city investments. Citylets found the average rent in Glasgow increased +5.8% during the first quarter of 2021, backed by InventoryBase’s research that found Glasgow provides the best rental yield of any city in the UK, with an estimated return of +7.52%. Rent recoveries are also taking place in locations such as Leeds, Birmingham and Manchester, with an emphasis on growth in Northern cities.
2. Trade cities for countryside & coastlines: Arbuthnot Latham found coastal yields are at their best in Brighton in East Sussex, Tynemouth in Northumberland and Crosby in Merseyside – all with a +3.9% return. Inland, countryside hotspots for rental returns include Bangor in Wales (+4.7%); Dumfries in Scotland (+4.1%) and Bury St Edmunds in Suffolk (+4.1%).
3. Cash in & exit buy-to-let entirely: if the rollercoaster of the rental sector is too much on top of taxes and escalating compliance, selling up is an option to explore. LandlordBuyer helps property investors who want to free equity and unburden themselves from buy-to-let. You can make a quick cash sale using our professional buying service.
We buy vacant lets and occupied rentals in city locations. In fact, we will buy any let, in any condition, anywhere in the UK! Your sale starts now – request a free valuation here or contact us for more information.