If you are considering a buy-to-let investment, it is still a great time to enter the market. The rental sector remains extremely strong, with over 15 enquiries for every home to rent.[i]
However, choosing the right property can be tricky. It is important to invest in the right area, and Zoopla has helpfully published a report on the highest yielding areas. In the southeast, Southampton performed especially well, so it is well worth exploring your options for Southampton buy-to-let opportunities.
It is important to make some calculations before purchasing a buy-to-let property to make sure your investment will pay off.
Divide the annual rental income by the property price, then multiply by 100.
E.g. A property costs £300,000 and you will charge £1000 rent per month.
£1000 x 12 = £12,000 annual rental income
£12,000 / £300,000 = 0.04
0.04 x 100 = 4% gross rental yield
Once you have your gross rental yield you can start to see if the property might be worth the investment. However, you must also take into account the expenses involved with owning a rental property e.g. maintenance, agency fees, mortgage.
[(Annual rent – annual expenses) / property value] x 100
E.g. A property costs £300,000 and your annual rental income will be £12,000, but you expect to have £3000 of expenses to pay.
£12,000 – £3000 = £9000 rental income after expenses
£9000 / £300,000 = 0.03
0.03 x 100 = 3% net rental yield
Using these calculations can help you compare properties to see which might be a better rental investment and decide: is buy-to-let worth it?
The trend in gross yields is that they have gone up in all regions in the last year.
Southampton has been singled out in the south-east as a good place to invest in buy-to-let property:
The average gross rental yield for the whole of the UK is 5.60%, showing what a great opportunity Southampton offers for buy-to-let investors.
While yield is undeniably important, there are other factors to consider when choosing which property to buy. Our team at Charters listed some of them.
Try and get an idea of house price trends in the area. If the property is likely to go up in value, it makes it an even more appealing proposition. Your estate agent will be able to help you with this.
Go ‘window shopping’ for buy-to-let mortgages to see what might be available to you. Also investigate what other costs you will face for each property that interests you.
It is no use having a great rental property if nobody is interested in renting in that area. Fortunately, rental properties in Southampton are in high demand, but some areas outperform others. Talk to your estate agent about which houses are likely to appeal most to renters.
It is worth researching what management agencies are available in the area to make sure you and your property will be properly supported.
Lots of landlords choose landlord services from a trusted estate agent like Charters to take care of the paperwork and day-to-day running of their rental properties. This saves time and inconvenience, while ensuring the property is cared for and managed in the correct way.
At Charters Estate Agents, we offer a comprehensive suite of landlord services at different levels:
If you are searching for rental properties Southampton, you can hope to achieve some of the best rental yields UK. As local estate agents, we have noticed the strength of the rental market and think it is a great time to invest.
If you are looking for Southampton buy-to-let properties, click here to see what is currently available in the area.
If you are interested in investing in rental property in Southampton, we are here to help. Our experienced team are here to support you at every step, from researching particular areas to finding property, matching you with tenants and carrying out a range of landlord services.
Southampton is one of the highest yielding areas for buy-to-let investments and a great place to purchase rental property. Please pop into our Southampton branch or give us a call to find out more.
We will be happy to answer all your questions.
[i] https://www.zoopla.co.uk/discover/property-news/best-buy-to-let-locations/ [Accessed 30/4/24]
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