Stamford buy-to-let sees returns of 8.82% in 2015

I recently got chatting with one of my ‘out of town’ landlords who was back in Stamford visiting his family.

Brought up in Stamford, he went to Stamford School in the 1970’s and is now a University Lecturer in central London.



To enhance his retirement, he has a small portfolio of 4 properties in the town and wanted my advice on where to buy the next Stamford property.  He lives in a college owned flat in Kensington and would never dream of buying there - the average value of a flat is £1.62m and a town house is £4.1m!

Before I could advise him, I reminded him that the most important thing when considering investing in property is finding a property with decent rental yields for income returns, yet at the same time, it must have the potential for capital growth.

This year, landlords will be under more pressure to find the best permutation of yields and capital growth, as extra stamp duty charges for buying properties and a squeeze on mortgage interest relief will raise their costs.

Before we look at yield and capital growth, one important consideration that many landlords often overlook is the propensity of how likely the rent will increase.  Interestingly, the average rent of a Stamford property currently stands at £775pcm, which is a rise of 6.2% compared to twelve months ago (although it must be noted this rise in rents is for new tenancies and not existing tenants).

Anyway, back to yield and capital growth, the average value of a Stamford property currently stands at £298,400, meaning the average yield stands at 3.12% p.a., which on the face of it, many landlords would find disappointing.  That is the problem with averages, if we look at 2 bed houses in Stamford which are the sort of properties a lot of landlords buy, the average value of a 2 bed house is £183,300, whilst the average rent for a 2 bed house is £705 per month, giving a yield of 4.62%.

However, if that isn’t high enough, there are a few landlords in Stamford who own some specialist properties with specialist tenancies, that are achieving nearly double that yield – again it comes down to your attitude to risk and reward (give me a call if you wanted a chat about those sorts of properties – although they can be fun and games).

Ultimately investors want to be making gains from both rent and house price growth.   When combined, the rental yield and capital growth gives you the return on investment, and that is what I told our landlord from Kensington.   Return on investment is everything.   So, property values in Stamford have risen in the last year by 4.2% which means the current annual return on investment in Stamford for a typical 2 bed house is 8.82% a year. Now that’s not bad!

Each week I post on this blog what I consider to be the week’s 3 best buy-to-let deals in the area, irrespective of which agent it is being marketed with.   But if you have an existing property, or have seen another great buy-to-let property and would like my opinion, please do get in touch.

David@upp-property.co.uk or call my office on 01780 484 554