It’s no surprise that the UK buy-to-let market is suffering a crisis of confidence right now. Landlords are becoming jittery over the stagnation (or in the case of London, painful decline) in property price growth over the past couple of years, not to mention tales of a possible market collapse in event of a cataclysmic ‘no deal’ Brexit.
They’re also becoming more and more troubled over the growing raft of regulations befalling the sector, a natural consequence of politicians trying to curry favour with the growing number of young and middle-aged adults still stranded in the rental trap.
Indeed, recent data shows that in this climate, landlords are more likely to reduce the size of their property portfolios than to buy up more bricks-&-mortar assets.
Irish eyes are smiling
Sure, conditions might be tough in Britain, but there’s still plenty of opportunity for buy-to-let operators to make a fortune. They simply have to look a little further afield.
Ireland, for instance, has proved a lucrative hunting ground for property investors for years now. A report from WorldFirst shows that little has changed.
The Emerald Isle just took top spot on the international payments specialist’s European Buy-To-Let League table for the third year in a row, with the average rental yield there registering at 7.69% in 2018. By comparison, the average rental yield in the UK stands at 4.67%, it said.
Commenting on the data, WorldFirst said that “investors in Ireland’s property market have benefitted from significant returns due in large part to reasonable property prices in comparison to soaring figures in other Western European countries. A stable euro, continued economic growth and consistent rental demand have also contributed to the country’s performance.”
WorldFirst said that while sterling has plunged around 17% over the past three years against the euro, Ireland still continues to offer strong returns for investors. It noted that “while a one-bedroom city centre apartment would now set you back almost £11,000 more than it would have this time last year (+6%), the good news is that average rents have risen by £127 (+11%) per month.”
UK buy-to-let remains robust
That’s not to say that the British buy-to-let market is totally unattractive, though. Strong rental demand means that average rents in England and Wales were up 2.6% year-on-year in September, according to estate agency YourMove, a rise which WorldFirst attributed to landlords increasing rents in response to the government’s decision to axe tax relief for proprietors.
All things considered, though, I believe that investing in stocks is far superior to taking the plunge in the rental market here or abroad. Indeed, if approached the correct way, buying into share markets has the capacity to make the sort of returns that most buy-to-let landlords can only dream of.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.