2022 has come with a set of unique challenges for everyone. The pandemic, inflation, and rising costs of energy have had substantial effects on the property market. It seems that wherever we look, we’re surrounded by bad news for landlords and the property sector. But what can you do to get the most out of your property investments in 2023?
Understand where rental demand is highest
Demand for rental properties in the UK has steadily increased throughout 2022. The Zoopla UK Rental Report (Q3) stated that UK rental growth is close to peaking at +12.3% per annum. Landlords should look towards the
East Midlands; particularly Derby and Birmingham which have been flagged as prime rental opportunities for landlords with rental growth estimates suggesting a 14% increase by 2026.
Benefit from increasing rental yields
Your rental yield is the sum of the total annual rent your tenant pays, divided by the value of the property. Rental yield is the most crucial metric to consider when starting a new property investment to estimate your returns.
This year has seen some positive news for landlords in relation to rental yields. Total returns from rentals recently climbed from -2% (2020) to an astounding 17% (2021). Even allowing for last year’s acceleration in inflation, these returns are impressive and provide hope for the remainder of 2022.
Understanding the areas where rental yield is highest could prove highly beneficial to property investors. Analysis from the property investment company Track Capital has found a handful of northern student cities to be leading uk rental yield increases, including; Newcastle Upon Tyne (Avg. 9.8%), Manchester (avg. 10.1%), Bradford (10.6%) and Nottingham (11.3%).
Whilst 2022 has brought a unique set of challenges for the rental sector, there are some promising trends that we hope to see carried over into 2023.
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