What are the UK’s buy to let hotspots?
Any investor can generate impressive income from buy-to-let properties – but knowing where to put your hard-earned cash is vital for success.
New UK-wide research suggests the sector can be highly profitable, although some parts of the country are much more profitable than others.
With landlords having to cope with issues like mortgage tax relief changes, the tenant fee ban, and reformed renting criteria, it’s never been more important to maximise your income. Here are my analysis of the UK’s buy to let hotspots.
North West of England is a buy-to-let powerhouse
A report from specialist lender Kent Reliance suggests landlords in the North West of England are seeing the highest rental returns on buy-to-let properties in the UK, closely followed by investors in Yorkshire and the East Midlands.
The research also shows that returns in the South East and London continue to be muted, as higher house prices reduce the benefits of rents.
According to the research, the North West delivers the highest returns, with average yields of 6.2 per cent, while Yorkshire and the Humber is close behind with yields of 5.9 per cent, followed by the East Midlands where average yields are 5.4 per cent.
The study measured prospective rent against the cost of buying a property in current market conditions. However, long-term buy-to-let investors who bought at lower prices will probably be generating even higher rental returns.
Capital’s performance dips, though prospects are improving
The picture is not so rosy in the South East, which propped up the rest of the ‘league table’ with yields of four per cent. Meanwhile, London and the East of England did not fare much better, with yields of 4.1 per cent and joint second-to-bottom rankings nationally.
However, despite London’s relatively weak performance in comparison to other regions, the capital’s yields are still at their highest levels since 2015.
Nationally, the average yield is 4.5 per cent – fractionally up from 4.4 per cent at the end of 2018 – and representing the highest level since the first quarter of 2017.
Identifying high-yield areas within regional markets
It’s also important to keep in mind that specific areas continue to deliver returns that outperform regional averages.
Another study from letting agent Portico Host revealed that within the North West market, the Liverpool area of Fairfield generates the highest yields of 13.6 per cent, followed by neighbouring Kensington at 9.8 per cent and Anfield at 9.6 per cent.
Why landlords are attracted to university hotspots
University cities with high student populations are particularly attractive as buy-to-let investment locations.
Liverpool, Preston, Manchester, Lancaster, Nottingham, Leeds and the North East have some of the country’s highest rental yields. Among the most lucrative is the NG1 postcode – an ideal location for students at Nottingham Trent University – where the average rental yield is almost 12%.
Advantages of providing student accommodation include regular term times and an ongoing flow of new students, fewer void periods, and the ease with which landlords can find suitable tenants.
Authored by Melvin Lunn
Melvin has over 20 years’ experience in global property sales and investment. For more information on investment in the UK buy to let market contact him 03333 034 767.
The above article is written as a guide only and does not constitute financial advice. Professional advice should be taken before entering into any property investment or financial agreement.
