Two areas of south Wales have been named among the best places for landlords to buy a property cheaply and make a profit renting them out, according to The Telegraph. The newspaper said there is “a huge interest from investors, especially from London and Bristol” in the Valleys with properties selling in days.
The newspaper highlighted Blaenau Gwent and Merthyr Tydfil as examples, explaining how landlords could make profits of around 10% from a £25,000 investment. It said that property investment in the area could be “fruitful” due to a shortage of properties in the area.
Rent prices across the UK have been driven up in recent years by a shortage of homes compounded by the huge demand among renters for bigger properties, triggered by the pandemic.
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In an article titled ‘How to invest in buy-to-let: where £25,000 will earn you the highest returns’, the newspaper pointed to Blaenau Gwent as the borough which has the highest rental yield in England and Wales, according to Hamptons estate agents. It said that “depressed property prices and high tenant demand in south Wales have boosted rental returns.”
By using a £25,000 budget, the newspaper highlighted four areas across the UK that would yield a 10% profit. These included Blaenau Gwent, Merthyr Tydfil, Hartlepool and County Durham.
In Blaenau Gwent they estimated that a £25,000 budget would be enough to cover the £15,530 deposit on an average flat in the area, plus stamp duty. They said a cash sum of this size would also just about cover a 25pc deposit on an average terraced house in the area, but investors would need to find extra cash to cover stamp duty.
Landlords could expect rental income of £5,065 a year from a flat, after mortgage payments and a 10% provision for maintenance costs, according to Hamptons.
In Merthyr, they found that £25,000 would be enough for an average 25% deposit on a flat in the area which is £14,990, rising to £25,830 for a terraced house. This would yield a 9.8p% profit for landlords at an average income of £4,518 from a flat and £7,787 from a terraced house after mortgage and maintenance costs.
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Emma Liverick of Bidmead Cook Estate Agents told the newspaper that tenant demand in Merthyr Tydfil had reached “unprecedented” levels, with properties being snapped up within two days of listing.
“There is huge interest from investors, especially from London and Bristol, because soaring rents in the area are offering good yields, despite property prices also having risen,” she said. “The lack of homes to let has pushed up rents massively in the past nine months. Where once a three-bedroom terraced house might list at £500 a month, the average is now between £675 and £700.”
A report by Zoopla yesterday showed that Wales continued to see the highest growth for the 12th consecutive month, with property values rising by 11.8%. Wales has also seen the strongest price growth during the past five years, with property values rising by 35%, compared with gains of just 6.5% in London.
House prices rose by 8.1% in the year to the end of February across the UK, nearly double the annual rate of 4.2% recorded in February last year, meaning the average home now costs £245,200. In Wales, the average increase was much higher in February compared to anywhere else at 11.8%.
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