The website Landlord Today claimed in November 2016 that Luton is the best location in Britain for buy-to-let investors because of the high value of rents and property price growth.
The profitability of buy-to-let investments has been under attack due to government and Bank of England changes. When considering the viability of a buy to let investment the location is a prime factor. The profit that can be made on buy to let property varies in different areas of Britain.
According to Landlord Today, rents in Luton have risen by 10%, which is the largest increase in the country. Property prices in the Bedfordshire town rose by 13.63%. Yields on property investments are based on both the capital value of the property and the rent level. Landlords can achieve yields of 4.81% in the Luton area.
Many landlords see the rise in property prices as more important than rent values. If the housing shortage continues, then prices should continue to rise.
Other areas that performed well were Stevenage, Northampton, Southend-on-Sea, Southall, Chelmsford, Dartford and Twickenham.
There have been many financial pressures on landlords in recent years. These include stamp duty rises and the decreases in tax relief. The Bank of England has introduced affordability rules that mean that lenders take into account a home’s rent levels before approving a commercial mortgage for buy-to-let property. This is why landlords looking to expand their portfolio are looking carefully at the best areas to maximise yields.