Landlord buy to let yields in Britain among the poorest in Europe
The UK had dropped 10 places in European rankings for buy to let property with Ireland, Malta and Portugal named as the top three best nations for buy to let landlords.
Britain is ranked 25th in Europe with average rental yields of 4% but in some parts of London it is as small as 2%, with the average much lower than the 7.08% in Ireland, 6.64% in Malta and 6.43% in Portugal.
Countries like Turkey, Cyprus, Bulgaria Latvia, Poland, Romania, Estonia and even Greece offer better buy to let yields than the UK, according to the research from payment firm WorldFirst.
Only Austria, France, Croatia and Sweden have rates lower than Britain. The report suggests that high property prices and stagnant rents are keeping yields low in these countries.
But in Ireland rents are rising and are now the second highest in Europe after Luxembourg. The report adds that in Malta, Portugal, the Netherland and Slovakia, which all have yields over 6%, low prices and good rental values have boosted yields.
It is suggested that Brexit along with changes in the private rental sector in Britain, most notably extra stamp duty on additional homes, the phasing out of buy to let mortgage tax relief and upcoming changes to lending criteria for landlords with multiple properties are having an effect.
‘The correlation between a country’s housing sector and the health of the wider economy is clear. It may now be the case that the deteriorating dynamics of the UK’s rental market is sounding the alarm for a wider slowdown in residential housing and thereby broader economic wellbeing,’ said Edward Hardy, an economist at WorldFirst.
‘While the UK remains in a purgatory like state between EU membership and Brexit, long term investment decisions have become increasingly difficult to make and falling returns for property investors could mark the beginning of the end for one of the UK’s most successful investment avenues of the past 25 years,’ he added.