Are landlords now looking for something other than strong yields?

Are landlords now looking for something other than strong yields?

When you are investing in buy-to-let property, one thing will be more important than anything else in most cases - rental yields.

The majority of landlords operating in the private sector are most interested in making sure that what they invest in brings them the best chance of a strong return throughout the period they have tenants, and it has been this way for quite some time, but are more now seeking out something else?

According to a newly-published report, this may well be the case, with Strutt & Parker suggesting that sentiment is changing, and more are looking at the long-term potential of their tangible assets as opposed to just what it can achieve for them in the immediate future.

The study found that in certain areas, buy-to-let investment has picked up considerably in the past two years, with 26.2 per cent of homes bought in certain London areas being purchased for this purpose, compared to just 2.3 per cent in the period prior. 

What people are looking to get from their investment now, however, is capital gains, rather than simply the rental yields that have typically been sought in the past. 

Zoe Rose, head of London lettings at Strutt & Parker, said that this has meant a change in the types of property that people are now looking to buy. 

"With discerning, long term renters now the norm, more and more landlords are comprehensively refurbishing their properties in order to attract the best tenants and this is also having an impact on pricing and the type of property most in demand," she added, stating that people are purchasing larger family properties because these have the best chance of capital gains in the future. 

And according to a separate report, it appears that landlords are mostly finding exactly what they are looking for at the current time. 

The Online Letting Agents' latest statistics have indicated that capital gains across the UK rental market rose to such an extent last year that landlords made 10.36 per cent returns on their investment, which can only bode well for long-term profits.