The top three buy-to-let areas with the highest rental yields in the UK are all in the North West so far this year, reveals research by HSBC Mortgages.
Rental properties in Manchester offer the highest rate of return at an average of 7.93%. The city was second in last year’s study.
Kingston upon Hull and Blackpool follow at 7.81% and 7.35% respectively.
Despite sky-high rents, London provides some of the lowest rental yields in the country.
According to HSBC, annual rents in Manchester have risen by 4% since 2014.
Buy-to-let investors seek properties in the North, as house prices are typically lower and therefore offer better returns. The average home in Blackpool costs around £80,000 and in Hull, this drops to about £70,000.
Additionally, the North West has one of the largest student populations in Europe, with over a quarter of housing stock in the region belonging to the private rental sector.
The study suggests that out of the ten worst buy-to-let locations for rental returns, six are in London, due to rent rises not keeping up with property price growth.
In Kensington and Chelsea, landlords can expect an annual yield of just 2.87%, with an average house price of £1m.
The buy-to-let market is thriving in many locations around the country and aspiring investors should focus on areas where rents outperform house prices.
Investors are advised to always factor in additional costs, such as landlord insurance, when calculating potential returns.