To buy or not to buy? Is the buy to let scene still worth investors' time?

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Over the last number of years, property prices across the UK have begun to rise, and with it, the buy-to-let market has also changed.

According to the ’ changing face of buy-to-let’ report by the Shawbrook Bank, since the first lockdown, buy-to-let properties have “seen marked price increases, with the value of the average buy-to-let property across the UK rising by 5.6 per cent.”

Demand from tenants has also increased dramatically with 42 per cent of landlords “reporting that they have seen demand increase for their properties in the past 12 months.” This in mind, the value, yield and demand for rental properties varies widely from region to region, and city to city.

This raises the question for those looking to buy to let in Newcastle; is becoming a landlord still a safe investment? To find out more about this, I spoke with local letting specialist Rook Matthew Sayer’s Elspeth Clark, as well as Christopher Wilkin and Kyle Dickson of Walton Robinson.

When asked if renting still stood to be a good investment Chris and Kyle told me that, “Buying the right property to let is still a good investment for prospective landlords looking to enter the sector or add to their portfolios. Rents in Newcastle have seen a steady increase which means that returns remain attractive and profitable for landlords.”

Elspeth told me that, “it is a good investment depending on the area. So, some areas have increased more than others. The rental income hasn’t reflected that. So it depends on where it is. But yes, it is still a good investment for landlords predominantly.

“I think it’s going to be locations like Gosforth and Jesmond. They’re always going to be popular for people who are looking for properties which are a little bit bigger and easier to rent out because of the location. They’re traditionally very, very good investments. And I don’t think that will ever change, those are areas that are always going to be popular.”

As a city with a massive student population, there is also real potential to yield high returns on renting to students. Chris and Kyle explained that, “Newcastle boasts two top-quality Universities, with a combined student population in excess of 50,000 meaning strong demand for restricted stock levels in the popular student areas, where regularly we see multiple applications for the same properties from student tenants.

“Properties are let well in advance of the end of current tenancies meaning landlords have the assurance of rental income for longer periods of time, and rents experience a steady increase year-on-year, and can be improved massively with the correct investment into the properties via refurbishment or adding rooms, all aided by the guidance an agency like Walton Robinson can provide to extract the maximum from your investment.”

Discussing student rental properties earning potential Elspeth added, “it’s still a promising investment, because we have so many students wanting to come to Newcastle.

“And it will be more difficult for a lot of landlords with that type of investment for costs because the cost of work is greater these days. However, it’s still promising because we do get a good level of income. And I think that everybody’s paying a little bit more in their rent as well. It’s definitely increased rental value to landlords also.”

While the market has risen across the board, not all areas of the city have been privy to the same rise in price. “Rents are increasing across all areas. Jesmond is always the most in demand stock from a rental front and therefore also from the investment side.

The team at Walton Robinson commented: “This demand here creates a shortage of supply, renters who can’t find a property in Jesmond often then turn to Sandyford and we have seen rents in this area increase just as much as Jesmond. Renters looking for slightly more value for money often turn to Heaton, rises in other areas have allowed rents to increase significantly in Heaton and still offer better value than those in other areas. We have also seen a healthy increase in properties in the City Centre. Again, the demand outstrips the supply for all of these areas.”

As we’ve heard, Newcastle provides ample opportunity for investors to safely expand their property portfolios. With Newcastle poised as one of the fastest growing cities in the UK, it is safe to say the value of property as an asset in this city will likely grow with the city.

By Mark Adair, Correspondent, Bdaily

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