Which Buy to Let Market Should You Invest In?

By Simon Morris On Tuesday, September 16 th, 2014 · no Comments · In ,

Recent evidence showing the income value of residential properties, has lead Simon Morris to ask this week; which buy to let market should you invest in?

Simon Morris, Residential Property Expert

As a London-based independent properties specialist, Simon Morris often acts in an advisory capacity to UK property investment funds. Simon’s expertise extends to all property classes, including residential.

As such, Simon is not surprised that evidence is emerging practically monthly at the moment, showing that the UK’s buy to let market is generating stable revenue streams. However, this market comes with advantages and disadvantages, which means you always need to think of location before you invest.

The Advantages and Disadvantages of Residential Property

Buy to let, the type of residential property easiest to profit from, comes with a major advantage, which is why five million Briton’s rely on it to provide their pension. Essentially, rental yield form residential has remained strong, despite the property market crash, and provides a stable income which drives revenue in the long term.

But buy to let comes with some downsides, which means that in order to maximise on it, you cannot have a portfolio purely based on this type of property. These properties come with up keep costs, building and content insurance costs, a loss of profit when it is not being rented etc. which can skim capital off of your rental yield.

Which Buy to Let Market Should You Invest In?

Which is why you need to be smart when you invest in buy to let property. Usually, that means capitalising on profitable markets. HSBC recently released a study showing where is proving profitable for buy to let right now.

The bank’s research showed that Southampton’s buy to let is riding high at the moment. With average house prices in Southampton at £143,011, and average rent at £1,040 per month, buy to let properties in this market will reap you the best return for your investment with a gross rental yield of 8.73%. This contrasts with second most profitable buy to let market, Manchester, which HSBCC figures showed had a 7.98% gross rental yield.

These Numbers Speak for Themselves

In Simon Morris’ opinion, these numbers speak for themselves. To capitalise on the long term revenue value of the buy to let property market, you need to invest in properties with a strong gross rental yield. Clearly, that means if you want to generate high long term profit margins, Southampton’s buy to let market is the one you should be investing in, as it has the capability to make you the most money.

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