Where is the best for buy-to-let investment in Europe?

Portugal and Turkey are best for buy-to-let investment in Europe, reveals new research from TheMoveChannel.com. The international property portal mapped rental demand across the continent to determine where the top markets are for landlords looking to invest.

A nation of renters or buyers?

Switzerland has Europe’s highest proportion of rented households, according to latest official figures from Eurostat, with almost 6 in 10 households occupied by tenants. As a nation where letting is the norm, Germany has the second highest number of rented households, followed by Austria and Turkey.

Tenants account for a large section of the UK population. The British government, however, has introduced a wave of recent measures designed to dampen buy-to-let investment, from the removal of mortgage interest tax relief to a 3 per cent stamp duty surcharge on the purchase of additional properties. The continent, therefore, may become the new buy-to-let market for many would-be investors.

Ranking the returns

The highest yields in Europe can be found in Moldova, according to Global Property Guide, with landlords able to expect 10 per cent returns. Ukraine is close behind with 9.09 per cent, followed by Montenegro (7.53 per cent), Ireland (7.18 per cent), and Hungary (6.42 per cent).

Croatia and Romania both rank inside the top 10 for rental yields in Europe, but fewer than 10 per cent of each country’s population rent houses, which leaves landlords with few opportunities to choose from.

Where’s best to invest?

Spain has seen a boom in buy-to-let interest, with Idealista data recently revealing that rents are now higher than they were at the market’s peak in six of its regional capital cities. Indeed, Spain is the most popular destination in Europe on TheMoveChannel.com. Across the country, though, rental performance and house price growth remains uneven, as the market’s recovery is primarily driven by coastal hotspots and major cities, where returns and tenant demand will be strongest. Overall, Spain’s average rental return is 4.7 per cent, according to Global Property Guide.

Portugal generates the second highest share of enquiries on the portal, but boasts the ninth best rental yields on the continent (5.64 per cent). With returns that beat both Spain and France, it is currently one of the best markets for landlords looking to Europe.

France’s larger-than-average rental population (35.9 per cent versus the EU’s 30.6 per cent) makes it a perennial favourite for holiday home renters, with the third highest share of enquiries on the portal. Italy is the fourth most popular country among investors, but low yields of 2.37 per cent stop it from topping landlords’ wish lists.

Turkey and Greece, however, are emerging as buy-to-let favourites for 2017, generating the fifth and sixth highest number of enquiries on TheMoveChannel.com. Turkey boasts some of Europe’s fastest rising house prices, while its rental population makes up 39.6 per cent of households, higher than even the UK. Greece offers 4.17 per cent rental yields and, with rising tourist arrivals, still-low property prices and a thriving Airbnb scene, it is well positioned to become one of the most sought-after destinations in the coming years.

“With the UK’s buy-to-let sector facing a growing headwind of financial changes, the continent may appear a more attractive alternative for many landlords in 2017,” comments TheMoveChannel.com Director Dan Johnson. “Wherever you are looking for a successful buy-to-let investment, though, location is always the most important thing to consider: Is the property in a popular tourist hotspot or a busy city? Is the national culture one that prefers renting to buying? And will the rental yields be high enough to make it worthwhile?”

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