Are buy-to-let properties a smart investment for 2024?
While there’s plenty in the news to promise a positive outlook in 2024 for home sellers, there’s not much information out there for property investors and landlords. So, we sat down and looked at the stats. Here’s how this year is predicted to turn out for those looking for a buy-to-let…
While each individual buy-to-let will need its own calculation (you can head to the bottom of the Landlords page on our website to calculate!) to determine how profitable it could be for an investor, it’s also important to look at general trends in the market and understand how data is coming in for the sector as a whole.
Taking a look at the current state of the market, we can see what’s to come for 2024…
London Stats
Track Capital have dished the data on rental yields for January 2024. It reveals that with an average property price of £599,652 (up 11% in the last 5 years) and an average monthly rent of £2,097, the average rental yield for Greater London now sits at 4.4%. This is a fantastic rise from January 2023’s 4%, and really shows the positive direction London’s lettings sector is now taking.
Cash buyers
While interest rates have been looking much more positive lately, some may be concerned for possible rises in the future. Yet this isn’t even a thought for those with an injection of cash who can either buy outright or with a very generous LTV mortgage, meaning the bottom line of the investment isn’t as affected by the ever-changing rates.
Rising rents and yields mean that buy to let investments are still worthwhile for landlords, and if the landlord has no or little debt, then the investment becomes a very attractive proposition. Not only are rents increasing in line with or even in excess of inflation, there will be capital growth too.
Mortgage rates
Mortgage rates are now starting to cool. The Bank of England base rate has stabilised at 5.25% and many expect it to fall in 2024. Lenders are reacting by lowering their interest rates following a peak in 2023.
Lower rates mean lower monthly repayments for anyone on a standard variable-rate or tracker mortgage. Plus, many landlords upped their rental prices over the last two years to cover the higher interest rates.
As a result, there’s more wiggle room for profitable returns and, therefore, higher yields.
Concluding thoughts
With the housing market in the UK taking an upturn into 2024 post-covid, the data proves conclusively that landlords are beginning to see a big pay off in holding strong throughout the last two years. Rental income is on the rise, due mostly to the huge demand in the private rental sector, and interest rates are finally evening out.
It’s clear that the UK rental market is a dynamic landscape. As we navigate through these changing currents, staying informed is key. Whether you’re a large portfolio landlord, a hesitant investor, or a first-time landlord keen to make the most of a property purchase, we can help.
Get in touch with our lettings team by calling 020 8866 0006 or emailing lettings@elliotlee.co.uk. OR if you’re looking for an instant lettings valuation CLICK HERE.