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Revealed: The UK’s Fastest and Slowest Buy-to-Let Property Payback Regions

Recent research by digital mortgage lender Molo has shed light on the varying durations it takes for buy-to-let properties in different UK regions to generate enough rental income to cover their purchase costs. This study, leveraging internal data, reveals significant contrasts in payback times across England and Wales.

In parts of Wales, landlords can recoup their investment in just over 12 years. The Central Valleys, for instance, with an average property price of £105,035 and monthly rent of £697, sees properties paying for themselves in about 12.56 years. This is starkly faster compared to other regions.

Following closely are Hartlepool and Stockton-on-Tees in the North East, where properties, on average, take 12.66 years to pay off their purchase price of £89,889. South Teesside, also in the North East, shows a similar trend with an average payback period of 13.05 years.

However, the scenario dramatically shifts when considering London’s Camden and City of London areas. Here, the high purchase price averaging £760,888, coupled with a monthly rent of £2,268, results in a lengthy payback period of 27.96 years. This is the longest duration observed in the study, surpassing other low-yield areas like West Essex and Dorset.

Mark Michaelides, Vice President of Strategy at Molo, highlights strategies for landlords to hasten this payback process. He suggests, “Landlords looking for additional ways to maximise rental income and earn back their money more quickly may consider home improvements, such as a new bathroom, kitchen or extension, which can increase both the rental potential and overall value. Making your buy-to-let more energy efficient is another way to boost rental income, as it may make the property more desirable to tenants due to lower energy bills.”

These insights provide a crucial perspective for potential landlords, indicating that while buy-to-let can be a profitable venture, the location of the property is a significant determinant of the investment’s timeline and profitability.