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Europe’s buy-to-let hotspots unveiled

While buying property in the UK has proved to be a lucrative move for many buy-to-let landlords, it is increasingly holding less appeal for those looking for generous rental returns. But where in Europe currently offers attractive rental yields?

According to the European Buy-To-Let League table from World First, the currency exchange specialist, Ireland now offers the highest rental yield in Europe, at an average of 6.54%.

Ireland replaced the Netherlands as the number one European destination for returns on offer for buy-to-let investors in November 2016, with the average rent for a one-bedroom apartment in an Irish city costs more than £11,000 a year, making it the second most expensive country to rent in Europe after Luxembourg which costs city renters over £14,000 per year.

In contrast, the cost of buying a one-bedroom apartment in Ireland remains relatively low, at an average of around £148,000, while a three-bedroom apartment house costs £285,000 on average.

The Netherlands and Portugal emerged as the next European hotspots with average yields of 6.35% and 6.33% respectively. Both countries have relatively low property prices compared to the rest of Europe, offering buy-to-let investors a cheap investment with high returns from profitable rental costs.

The UK climbs six places from 21 to 15 on the list as property price growth across the country slows, despite the introduction of the 3% stamp duty surcharge in April for those investing in buy-to-let or purchasing a second home.

In contrast, Sweden (3%), Italy (3.26%) and France (3.55%) remain at the bottom for the worst returns for investment across the continent. 

Nov 16 Rank Apr 16 Rank Country Average Rental Yield
1 +9 (10) Ireland (€) 6.54%
2 -1  (1) Netherlands (€) 6.35%
3 –    (3) Portugal (€) 6.33%
4 -2  (2) Belgium (€) 6.32%
5 -1  (4) Hungary (HUF) 6.21%
6 -1  (5) Turkey (TRY) 6.21%
7 –    (7) Bulgaria (BGN) 6.04%
8 –    (8) Malta (€) 6.01%
9 -3  (6) Slovakia (€) 5.94%
10 +2 (12) Latvia (€) 5.41%
11 -2  (9) Cyprus (€) 5.41%
12 +2 (14) Poland (PLN) 5.20%
13 –   (13) Romania (RON) 5.14%
14 -3  (11) Denmark (DKK) 5.04%
15 +6 (21) UK (£) 4.91%
16 -1  (15) Spain (€) 4.87%
17 -1 (16) Czech Republic (CZK) 4.84%
18 +5 (23) Estonia (€) 4.46%
19 -2 (17) Greece (€) 4.44%
20 –    (20) Finland (€) 4.39%
21 -2   (19) Lithuania (€) 4.36%
22 +2  (24) Slovenia (€) 4.29%
23 -1  (22) Germany (€) 4.21%
24 -6   (18) Luxembourg (€) 4.08%
25 -1   (24) Austria (€) 3.86%
26 –    (26) Croatia (HRK) 3.75%
27 +1  (28) France (€) 3.55%
28 -1   (27) Italy (€) 3.26%
29 –    (29) Sweden (SEK) 3.00%

Commenting on the research, Edward Hardy, market analyst at World First, said: “The stamp duty surcharge which came in this April put a sting in the tail of buy-to-lets in the UK, but the government’s decision in the build up to the Autumn Statement which will limit the number of high loan-to-value mortgages available to those investing in buy-to-let or second properties has been the final icing on the cake.

“Therefore savvy investors need not look too far afield for great returns. The resurgence seen in the Irish economy over the past few years has buoyed its property market and in particular its rental sector. The arrival of global tech giants like Google, Facebook and Microsoft have pushed rent prices up creating attractive yields for buy-to-let investors.

“For UK investors, it is also important to take into account how currency swings could affect your yield. The fall in Sterling following the EU referendum will make it more costly to buy property abroad but will also mean a higher rental income. Active planning will be key to ensuring any foreign buy to let investments get you bang for your buck.”

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