Rising Costs - buy-to-lets cost up to 7.7% more on average

Mortgage experts, Revolution Brokers, claim that landlords hoping to reduce void periods by investing in a buy-to-let within high-demand areas will pay 6.2% more.

Data on the average price for a buy-to-let investment in England was analysed. How this differs between areas with, and without, a high level of rental demand was also compared and contrasted. 

Which areas in England cost the most?

On average across England, investing in a high rental demand area will set you back £396,349. Compared to areas experiencing lower rental demand that is an additional £23,000 on the initial investment

Landlords can expect to pay the most in the South West. This will set landlords back by £345,908 which is 7.7% more compared to locations with low rental demand.

Some of the highest property price premiums for a high rental demand investment were observed in the East of England and North West 7.3%. This is followed by the South East (6.2%) and London (5.8%). 

Although this premium is at its lowest in Yorkshire and the Humber, the average landlord can still expect to pay 3.5% more to secure an investment property. 

Founding director of Revolution Brokers, Almas Uddin, commented: “When investing in a buy-to-let the initial cost of your investment is often one of the most influential factors in the decision making process. Not only do you have to be able to fund the purchase itself, but the sum spent upfront has a direct impact on the yield you will be able to return.”

“However, the secondary factor is the rent you are able to generate and the consistency at which you are able to secure it. In high demand rental areas, not only will you be able to justify a higher rate of rent, but you will also benefit from a far lower level of void periods.”

“Minimising void periods is an incredibly important part of maximising your investment as you can have the best yield in the world, but if you can’t fill the property with a paying tenant it doesn’t count for much.”

“So when looking to invest, landlords should always do so with a long-term view of a property, not just how much it costs, but what they can expect as a return and how easily can they rent it in the first place.”

“With this in mind, paying a premium to secure a home in a high rental demand area may come at an initially higher cost, but it can pay dividends further down the line.”