For the third year in a row Ireland has been named the most attractive destination for Europe’s buy-to-let investors
Reasonable property prices, a stable economy and consistent rental demand all add up to make Ireland a very tempting proposition for buy-to-let investors.
According to the third annual European Buy-To-Let League Table from WorldFirst, an international payments expert, Ireland is the best destination in Europe for landlords.
Ireland offers an average yield of 7.69%, making it very appealing for investors hoping to maximise rental returns. Hot on its heels is Cyprus, up from 9th place last year to the second slot this time around, while right at the bottom of the table is France, which knocked Sweden off the least-coveted spot.
Why invest in Ireland?
Despite rising property prices – in Ireland a one-bed city-centre apartment would set you back almost £11,000 more compared with last year, an average rise of 6% – rental prices are up by £127 (11%) per month, meaning landlords are still well in pocket. In Dublin, the rental yield is 6.46% – impressive for a capital city.
Ireland’s success is also no doubt helped by the fact that property prices are currently soaring across much of Western Europe.
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Jeremy Thomson-Cook, chief economist at WorldFirst, says: “Part of the reason for Ireland’s buy-to-let success is while average house prices across the country are on the rise, they still sit some way below the country’s 2008 peak. What’s more, only Malta, Luxembourg and Sweden have experienced higher population growth than Ireland meaning that rental demand continues to go from strength to strength. Add these two factors together and you have a compelling overall proposition for buy-to-let investors.”
Average rental yields across Europe
| Country | Yield | Rank | Position change |
|---|---|---|---|
| Ireland (€) | 7.69% | 1 | Same |
| Cyprus (€) | 6.87% | 2 | +7 |
| Malta (€) | 6.80% | 3 | -1 |
| Portugal (€) | 6.06% | 4 | -1 |
| Bulgaria (BGN) | 6.02% | 5 | +3 |
| Slovakia (€) | 5.80% | 6 | -1 |
| Netherlands (€) | 5.79% | 7 | -3 |
| Turkey (TRY) | 5.68% | 8 | -1 |
| Latvia (€) | 5.50% | 9 | +2 |
| Poland (PLN) | 5.39% | 10 | +3 |
| Spain (€) | 5.31% | 11 | +1 |
| Belgium (€) | 5.22% | 12 | -6 |
| Romania (RON) | 4.99% | 13 | +1 |
| Hungary (HUF) | 4.97% | 14 | -4 |
| Estonia (€) | 4.72% | 15 | +2 |
| UK (£) | 4.67% | 16 | +9 |
| Lithuania (€) | 4.63% | 17 | +4 |
| Greece (€) | 4.41% | 18 | +2 |
| Luxembourg (€) | 4.37% | 19 | +3 |
| Italy (€) | 4.29% | 20 | +3 |
| Finland (€) | 4.23% | 21 | +3 |
| Denmark (DKK) | 4.22% | 22 | -7 |
| Slovenia (€) | 4.17% | 23 | -7 |
| Czech Republic (CZK) | 3.89% | 24 | -5 |
| Croatia (HRK) | 3.86% | 25 | +3 |
| Germany (€) | 3.86% | 26 | -2 |
| Austria (€) | 3.84% | 27 | -1 |
| Sweden (SEK) | 3.32% | 28 | +1 |
| France (€) | 3.20% | 29 | -2 |
In comparison, the UK, which currently offers an average rental yield of 4.67% (3.17% in London), sits in the middle of the league table at number 16, climbing up nine spaces from the 25th spot last year.
One factor helping the UK’s outlook improve is the fact that there is a strong rental demand, with research from YourMove reporting that the average UK rent is now 2.6% higher than last year (although higher rents are partly due to the government’s decision to cut landlord tax relief in 2016, which has led some landlords trying to claw back their returns).
Uncertainty over Brexit also continues to cast a shadow across the UK’s investment market.
Thomson-Cook says: “While the domestic market has lost its lustre for UK landlords, our research clearly shows that opportunities remain across the European Union more widely. However, though access to this market is still good – it is anyone’s guess as to how much longer that will last.
“For any landlord taking the plunge and looking to invest abroad, while the value of the pound might make the initial purchase price less palatable than it was a few years ago, collecting rent in a different currency could really pay off – particularly if you look further afield than your high street bank for the best exchange rates to bring that income home.”
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