ByMark Wilding and Richard Hook

UK plummets down EU buy-to-let league

The UK has fallen into the bottom five European buy-to-let markets for investors as UK yields drop to just 4%.

In the latest European Buy-To-Let League Table from WorldFirst, Ireland is the top European location for buy-to-let investments as average rental yield in the country rose to 7.08% from 6.54% in 2016.

The latest findings come a year after stamp duty changes came into play in the UK, significantly increasing fees for those investing in buy-to-let or purchasing a second home therefore making property investment even less of an attractive option and prompting Property Week's Call Off Duty campaign.

The falling value of the pound has led to a significant increase in cost of purchasing a buy-to-let property with a one bedroom apartment in an Irish city costing over £12,000 more than it would have in 2016 and the same property in Luxembourg over £25,000 more expensive. By contrast, the average rent for a one bedroom apartment in an Irish city has soared to over £12,000 making it the second most expensive country to rent in the EU after Luxembourg which costs city renters over £14,000 per year.

Edward Hardy, chief economist at WorldFirst, said: “The correlation between a country’s housing sector and the health of the wider economy is clear. It may now be the case that the deteriorating dynamics of the UK’s rental market is sounding the alarm for a wider slowdown in residential housing and thereby broader economic wellbeing.

“While the UK remains in a purgatory-like state between EU membership and Brexit, long-term investment decisions have become increasingly difficult to make with falling returns for property investors."

Malta, Portugal, Netherlands and Slovakia emerge as the next European hotspots with yields over 6%.