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Is Ireland the next buy-to-let hotspot?

Tuesday 24 October 2017

Ireland has topped the European buy-to-let investment league table for the second year running, research by World First has found.

While some investors in the UK have seen their yields fall, the average rental yield of an Irish buy-to-let property in 2017 was 7.08 per cent, compared with 6.54 per cent in 2016.

And according to the Global Property Guide, Irish house prices rose at the third fastest pace in the world, with Ireland behind only Iceland and Hong Kong.

The average annual rent for a one-bedroom apartment in an Irish city was just over £12,000, making it the second most expensive country to rent in the EU, after Luxembourg, where renters can expect to pay an average of more than £14,000 per year.

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

All four countries have relatively low property prices yet rental averages provide an opportunity to earn a decent income, according to the league table complied by World First, an international payments expert.

Sitting at the bottom of the table are Sweden, Croatia, France and Austria all providing returns of less than 4 per cent due to high property prices and a stagnant rents. Sweden falls into last place for the third time due to its tightly controlled rental market.

Ireland’s economy, one of the fastest growing in the eurozone, also saw gross domestic product (GDP) rise by 5.8 per cent during the 12 months to June 2017.

Mike Wragg, a property lawyer at P Collins, said the Irish government’s decision to revoke a cut in mortgage tax relief in 2016 had made investment there more appealing.

Paul Mahoney, managing director of Nova Financial, said: “The impact of Brexit has been fairly minimal thus far, given that no one really knows what form it will take.

“The global property market has continued to grow in spite of predictions of Armageddon. The London property market is cooling but I don’t believe this to be due to Brexit, rather the result of a cyclical market following a very strong run.”

And Ireland’s growing attraction for buy-to-let investment has also been driven by the removal of some of the financial breaks previously enjoyed by UK landlords.

A series of tax changes, including a 3 per cent stamp duty surcharge, the axing of the wear-and-tear allowance and the phasing out of mortgage interest tax relief have all impacted on buy-to-let investors in the UK.

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