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The M25 Rental Ring – Southern junctions’ home to higher rental yields while the north is better for tenant affordability

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Leading lettings management platform, Howsy, has looked at the cost of renting around the M25 and where is best for tenants and landlords based on rental affordability and yields.

While public transport often takes the spotlight in London, the M25 also provides a great way to navigate around the capital and beyond, increasing demand for rental property close to a junction.

Howsy looked at the property markets surrounding each junction of the famous motorway and the average cost of renting, as well as the current average yields available for buy-to-let investors.

North vs South

Howsy looked at junctions around the south section of the M25 in relation to the north section and found that the average rent is higher along the southern stretch at £1,524 per month to £1,352 along the northern section.  

So while tenants should head for the likes of Slough, Watford, Enfield, Epping and Romford for a more affordable M25 rental, those looking to invest in a buy-to-let are better off opting for Leatherhead, Reigate and Sevenoaks. Yields around the southern junctions of the M25 are currently at an average of 4.01% annually, compared to 3.61% along the north side.  

The best of the bunch

The cheapest rental option around the M25 is currently junction 31, with the average rent at £1,089 per month. Junction 1B on the southern stretch of the motorway also offers good value for tenants at £1,090 a month, as does junctions 21 (£1,093), 26 (£1,113) and 13 (£1,143).

For buy-to-let investors, junction 31 is the top pick for a rental investment with yields currently hitting 5.43% in the surrounding area. Junctions 9 (5.14%), 30 (4.67%), 1B (4.50%) and 15 (4.45%) are also home to some of the highest rental yields on the M25 ring.

Founder and CEO of Howsy, Calum Brannan, commented:

“Despite the endearing title of Britain’s biggest car park, the M25 remains a vital piece of transport infrastructure and while the focus of many tenants in London’s most central boroughs is always the availability of good public transport, the M25 and easy access to it, can be a very valuable selling point for those in the capital’s peripheral areas.  

As with any property investment, it’s key factors such as easy transport links that can ensure a sustained level of tenant demand and justify the rental price of a property, which in turn, also helps maintain a healthy rental yield on a property.

It’s interesting to see that unlike central London boroughs, the M25’s southern junctions seem to be the more in demand and home to a higher rental price than the north side, as they provide much quicker routes into the centre of London.”

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Cost of maintaining a buy-to-let hits £12k a year in parts of the UK

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Leading property management platform, Howsy, has looked at the cost of maintaining a buy-to-let property each year and how this varies across the UK.  

Buy-to-let can be a tricky business if you don’t tackle it properly and there are a whole host of costs that can trip up the amateur investor. From the more obvious additional three percent stamp duty tax, to various other tax implications, void periods, mortgage costs, agency fees, the cost of finding a tenant, and more, Howsy’s previous research shows the average buy-to-let brings an annual return of just £2,000.

With the Government’s continued attack on UK landlords, making the most out of your investment financially can be tough and even when you consider all financial commitments for a property, many can still be caught unaware by out of the blue maintenance and repair costs. 

Buy-to-let landlords should squirrel away savings in anticipation of these events and an industry rule of thumb is an annual budget equivalent to 1% of your property’s value. 

So what does that equate to?  

Across the UK landlords should be tucking away an annual budget of £2,344 to cover repairs and maintenance, with this rising to £4,746 in London, with the North East home to the lowest repair costs at just £1,328. 

Of course, markets with higher rent returns may seem promising from an investment standpoint but the higher the reward, the higher the cost when things do go wrong. In Kensington and Chelsea, this annual 1% saving climbs to an eye-watering £12,292, hitting nearly £9,000 in both the Cities of London and Westminster.  

Outside of London, South Bucks and Elmbridge are home to the most expensive buy-to-let maintenance costs at £6,091 and £6,019 respectively.

Head to the likes of Burnley or Blaenau Gwent however, and this yearly maintenance budget drops to less than £1,000 a year.

Founder and CEO of Howsy, Calum Brannan, commented: 

“The buy-to-let sector can be a minefield for the amateur investor and now more than ever, it’s imperative that you do everything you can to maximise the return on your investment.

While technology now allows a greater level of control and service when managing your investment at a lower cost via online platforms, it isn’t just about the financial side of things. Providing a fit for purpose property is not only a legal requirement but essential to ensure a happy tenancy and a reduction in void periods.

Of course, things can go wrong and having the budget available to fix them is a must. In the worst-case scenarios, a cash pot equal to one percent of your property’s value might not be sufficient, but it should cover you for most eventualities and is a good benchmark to start on.

As with all buy-to-let investments, good preparation, organisation, and education are key, and whether you go it alone or have a great management agent if you stay on top of things, a bricks and mortar investment is still one of the best you can make.” 

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