Research from Landlord Mortgages shows that letting agents in some regions of the UK are overstating rental returns on investment properties by up to 25%.
Posing as first a tenant and then a potential property investor, researchers enquired as to how much a two bedroom flat in specific developments could be rented for. Whilst London at 25% and Birmingham at 13% boasted the most inflated prices for the second year running other areas of the country showed a different trend.
Letting agents in Manchester and Liverpool massively under quoted potential rental returns at 25% and 15% respectively. For the second year running Sheffield appears to boast the most honest agents who quoted the same to both tenant and investor.
Overall the trend is for agents to quote approximately the same to both class of caller compared to an overstatement of 8.5% last year. This indicates a more cautious approach taken by letting agents, perhaps brought on by increased competition to find rental properties.
Lee Grandin, managing director of Landlord Mortgages, says: These results show that it is still crucially important for landlords to thoroughly research prospective properties before making any purchasing decisions. By relying purely on the advice of letting agents some investors may be facing a serious rental shortfall or even be put off a perfectly good property by an overly pessimistic assessment..
Other feedback from the research indicates that extra features such as allocated parking can really boost the expected rental income as more people will be tempted to move away from the city centres. Investors who thoroughly research their potential investment looking for features such as these can expect higher rental income and fewer void periods.