Are Buy-To-Lets still a prosperous investment in 2024?
The property market is seeing a huge lift this year already as 2024 starts off with a bang for homeowners, but does the same excitement extend to those looking to invest in a buy-to-let this year? Let’s look ahead and weigh up the opportunities coming in for landlords.
While each individual B-T-L will need its own calculation to determine how profitable it could be for an investor, it’s also important to look at the general trends in the market and understand the data coming in on the sector as a whole.
Taking a look at the current state of the market, we can see what’s to come for 2024…
The South-East
Track Capital have dished the data on rental yields for January 2024. It reveals that with an average property price of £451,457 (up 17% in the last 5 years) and an average monthly rent of £1,502, the average rental yield for the South-East of England now sits at 4.26%. This is a huge jump from January 2023’s 3.65%; showing what an incredible difference just one year can make for a property investor.
Cash buyers
While interest rates have been looking much more positive lately, some may be concerned for possible rises in the future. Yet this isn’t even a thought for those with an injection of cash who can either buy outright or with a very generous LTV mortgage, meaning the bottom line of the investment isn’t as affected by the ever-changing rates.
Rising rents and yields mean that buy to let investments are still worthwhile for landlords, and if the landlord has no or little debt, then the investment becomes a very attractive proposition. Not only are rents increasing in line with or even in excess of inflation, there will be capital growth too.
Mortgage rates
Mortgage rates are now starting to cool. The Bank of England base rate has stabilised at 5.25% and many expect it to fall in 2024. Lenders are reacting by lowering their interest rates following a peak in 2023.
Lower rates mean lower monthly repayments for anyone on a standard variable-rate or tracker mortgage. Plus, many landlords upped their rental prices over the last two years to cover the higher interest rates.
As a result, there’s more wiggle room for profitable returns and, therefore, higher yields.
Concluding thoughts
With the housing market in the UK taking an upturn into 2024 post-covid, the data proves conclusively that landlords are beginning to see a big pay off in holding strong throughout the last two years. Rental income is on the rise, due mostly to the huge demand in the private rental sector, and interest rates are finally evening out.
It’s clear that the UK rental market is a dynamic landscape. As we navigate through these changing currents, staying informed is key. Whether you’re a large portfolio landlord, a hesitant investor, or a first-time landlord keen to make the most of a property purchase, we can help.
Get in touch with our lettings team by calling 01843 222700 or emailing lettings@oakwoodhomes.biz.