UK buy to let investors slipping down European league table

Yields from buy to let in the UK are now amongst the worst in Europe according to a new league table drawn up by an international payments company.

Ireland is once again the top European location for buy to let investments - average rental yield rose to 7.08 per cent from 6.54 per cent in 2016.

According to WorldFirst’s assessment, the UK’s stuttering rental market is beginning to hit BTL investors with yields falling from from 4.91 per cent to 4.00 per cent over the past year. 

In the past 18 months the additional homes three per cent stamp duty, the scrapping of the old-style wear and tear allowance and the start of the phased cutting of mortgage interest tax relief have all hit BTL profitability for investors.

Since the EU Referendum the falling pound has led to a significant increase in the cost of purchasing an Irish BTL property for a UK investor with a one bedroom apartment in an Irish city costing over £12,000 more than it would have in 2016 - and the same property in Luxembourg over £25,000 more expensive.

WorldFirst says those who purchased a property prior to the recent fall though will see returns from rental income increase by up to 8.00 per cent, getting £900 more a year for a one bedroom apartment in an Irish city.

The average rent for a one bedroom apartment in an Irish city has soared to over £12,000 making it the second most expensive country to rent in the EU after Luxembourg which costs city renters over £14,000 per year. 

And whilst sale prices have seen an increase, these have remained closer to their European counterparts with the average cost of a one bedroom apartment in an Irish city costing over £168,000.

Malta, Portugal, Netherlands and Slovakia emerge as the next European hotspots with yields over 6.0 per cent. All four countries have relatively low property prices yet rental averages provide an opportunity to earn a decent income.

Also sitting at the bottom of the table are Sweden, Croatia, France and Austria, all providing returns of less than 4.0 per cent due to high property prices and a stagnant rents. Sweden takes last place for the third time due to its tightly controlled rental market.