2015: Regular buy-to-let returns to rise 2% as demand continues

2015: Regular buy-to-let returns to rise 2% as demand continues

Both capital returns and rental income is set to grow over the coming 12 months, according to a new Rics report.

Summary:

  • Rental returns will rise by an average of 2% next year
  • Property investors can maximise returns by investing in regional property cities, such as Newcastle
  • Capital growth across the UK has been predicted to rise by 3% in 2015

The rental returns generated by the average UK buy-to-let investment are set to rise 2% in 2015.

A new forecast by the Royal Institution of Chartered Surveyors (Rics) suggests that a lack of supply of new homes and a continued demand for accommodation will see monthly rents rise by 2% while property price growth will average 3%, although there will be significant regional variation.

Rics said all regions of the UK will see price rises during 2015, but the traditional real estate hotspot of London will grow at a much slower pace over the next 12 months. The group’s chartered surveyors explained that the capital’s market will ‘pause for breath’, with the best investment opportunities likely to be in the eastern boroughs.

Following last year’s introduction of the Help to Buy scheme, rental enquiries are set to rise once more and will comfortably outstrip the new supply of property coming on to the rental market. Although rents in the capital will rise in line with the national average of 2%, regional property could offer property investors the most lucrative opportunities with Rics highlighting north-east cities, such as Newcastle.

Simon Rubinsohn, Chief Economist at Rics, said 2014 was the year in which the UK property market underwent a broad recovery and now the recently announced reform of stamp duty will provide further stimulus, particularly for first-time buyers.

“That said, the bigger affordability issue is not going to go away highlighting just how important it is to speed up the supply pipeline of new homes over the coming years,” he added.

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