These ARLA Indices of Rental Returns provide national and regional figures and are calculated in two ways. The first is based on the initial total cost of investment for a rental property investment without mortgaging. The second shows the return on an initial cash investment of 25% of the value of an investment property with the remainder financed with a mortgage.
The first ARLA Indices of Rental Returns show a return of 9.62% without mortgaging and 19.82% for an investment with a 25% cash deposit on the total value of the property. These annual compound rates of return are projected over a five-year period to reflect the likely minimum lifetime of a buy-to-let investment and to give a reasonable period to amortise buying and selling costs.
Announcing the new ARLA indices, John Crossley, chairman of ARLA, said: “For the first time we can look at buy-to-let as an investment in relation to all the other investment opportunities. ARLA is particularly pleased to launch this new quarterly table of Indices exactly six years after the concept of buy-to-let was first launched by the Association. The success of buy-to -let has also improved the quality of much of the rental market and made renting socially acceptable once again.”
