Buy to let property investors in the UK need to do their homework and find which areas in the country bring the highest rental yields it is claimed. Research from residential property group Move with Us, reveals the best buy to let property hotspot in the country and is designed to give investors insight into the regions that offer the best rental yields.
The study looks at two bedroom properties for sale and for rent and identifies that the highest yields are scattered widely across regions and mainly outside of Greater London. The combination of lower capital costs and reasonable rental prices has delivered gross yields in the range of 8.7% to 10.6% in the top 10 yielding postal districts. Birmingham has three postal districts in the top 10 which indicates that the country’s second city’s rental sector presents significant opportunities. The highest yielding areas of Wales are to the north of Cardiff and return 7.5%.
‘Landlords looking to maximise yield will need to look outside of central London. Commuter belts to the west and east of London are clearly yield hot spots as renters look to access the capital’s work and social opportunities without the cost of renting a central London property,’ said Sean King, chief executive officer at Move with Us.
Quote from PropertyForum.com : “The Office for National Statistics (ONS) has upgraded UK economic growth in the second half of 2013 from 0.6% up to 0.7%.”
At the other end of the spectrum rental property is only offering landlords a return in the region of 2% in the more isolated areas of England and Wales. Countryside locations such as the Brecon Beacons, rural Devon, the Peak District, the Yorkshire Dales, Exmoor and Dartmoor, are more sparsely populated and tend to attract homeowners rather than the young professionals who will pay a rent premium for living near to work and nightlife.
‘This new study is a route map for investors in search of the highest potential rental yields. Landlords clearly need to be open minded about where to invest and not simply look in their immediate area. A highly localised approach identifying the ultimate combination of in demand property types, lower capital investment and higher rental prices will deliver good yields and fewer voids, and maximise potential returns,’ said Doug Shephard, director at Home.co.uk. ‘However, whilst gross rental yields can be attractive, it is important for investors to appreciate that changing capital values can radically alter the real investment potential. In our next analysis we will take a look at mapping real yields across the country,’ he added.
The research also reveals that large swathes of greater London currently return an average yield of less than 4%. This is at odds with strong house price growth widely reported in the capital. Infrastructure investment into the Stratford area has created a lasting legacy for landlords with three of the top five Greater London postcodes clustered within sight of the Olympic area in post code areas E15, E13 and E6 returning yields of over 7%.