It was once the destination of choice for buy-to-let investors, but London has fallen way out of favour with both would-be and existing landlords over the past year.
The electrifying property price growth of recent decades may have required some truly staggering wads of cash for people to build their property portfolios. However, the rate at which rents were also booming in the capital meant for many this was a price worth paying.
How things have changed since then. London is no longer considered hallowed ground by buy-to-let participants. Added to the problem of stagnating or even falling property prices in some boroughs, changes to stamp duty on second homes have also resulted in eye-watering payouts to the taxman compared with those of previous years.
Bristol’s best
There’s a treasure trove of evidence showing returns in other British cities now exceed those you can expect from investment in the capital. And new research from Bunk gives fresh ammunition for landlords to give London short shrift and buy elsewhere.
According to the lettings platform, which sought to discover the country’s most in-demand city based on which have the highest number of properties already let as a percentage of total listings, Bristol came top of the pile with a score of 50%. Newport and Nottingham followed in second and third place, respectively.
Top 10 Cities By Demand
|
Location
|
Rental demand
|
|
Bristol
|
50%
|
|
Newport
|
39%
|
|
Nottingham
|
36%
|
|
Plymouth
|
34%
|
|
Cambridge
|
34%
|
|
Portsmouth
|
32%
|
|
Bournemouth
|
30%
|
|
Oxford
|
29%
|
|
Manchester
|
26%
|
|
Glasgow
|
25%
|
Commenting on the data, Bunk co-founder Tom Woollard said: “We’re starting to see a real change in the rental market with a number of the more alternative cities coming to the forefront in terms of popularity,” with renters seeking out great places to live without the huge rents that come with so-called traditional cities.
London found itself languishing in the bottom 10 of Bunk’s report with a score of just 21%.
Bottom 10 Cities By Demand
|
Location
|
Rental demand
|
|
Aberdeen
|
8%
|
|
Newcastle
|
14%
|
|
Edinburgh
|
14%
|
|
Leeds
|
16%
|
|
Swansea
|
16%
|
|
Liverpool
|
18%
|
|
Cardiff
|
21%
|
|
Belfast
|
21%
|
|
London
|
21%
|
|
Sheffield
|
22%
|
Sticking with stocks
I have to confess, though, that this latest set of data isn’t enough to encourage me to get involved in the Bristol buy-to-let scene. No thanks. Given the mix of rising costs and increasing paperwork, not to mention the vast amounts of initial cash needed to buy property in the UK, I’d rather stick with stock investing.
And what a time to be an investor in equity markets right now. Dividends from the world bourses are hitting record high after record high. While signs of a slowdown in the global economy are predicted to dent many a company’s earnings in 2019, any such slowdown are unlikely to harm payout growth in the immediate future.
Take a look at the FTSE 100, for instance. The average forward dividend yield for the index sits at a chunky 4.3%, though this is not the only reason to grab a slice of some of Britain’s blue-chips. As I type, some of the index’s big hitters are trading on irresistibly-cheap valuations, something which is illustrated by the Footsie’s low forward P/E ratio of around 13 times.
My tip? Take advantage of the recent reversal in FTSE 100 share prices and go grab a big-dividend-paying bargain, or two.
