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Another blow for buy-to-let, as UK slips down European league table

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The UK is now among the worst places in Europe to hold buy-to-let property.

In the league, compiled by payments group WorldFirst, the UK has slipped 10 places to 25 (out of 29) and is now the fifth worst country for buy-to-let investment in Europe with yields at an average of 4%

Ireland maintains its top spot, with the highest rental yield in Europe, 7.1% for second year, while Malta, Portugal, Netherlands and Slovakia also have yields over 6%.

Only Austria, France, Croatia and Sweden fare worse than the UK, with average yields all under 4%. The yield in the UK has fallen from 4.91% to 4% over the past year.

The weakness is on top of stamp duty changes, which increased fees for those investing in buy-to-let or buying a second home. UK buy to let investors are also seeing some income tax advantages progressively withdrawn.

Ireland’s buy to let owners are benefiting from rising rents, fuelled by greater economic strength. 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. Those at the bottom of the list tend to have higher property prices and stagnant rents. Sweden takes last place for the third time due to its tightly controlled rental market.

Edward Hardy, 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.”

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