Where is Best to Buy Property for BTL Investment?
Property investors are looking outside of London and finding the best locations for rental yields.
Cities offering the highest returns, almost three times as high as London, include Southampton, Blackpool, Nottingham, and Hull.
This latest research comes from lender HSBC, who have found the proportion of property that is already owned by landlords, in each area. In most of the highest earning places, private landlords own around one in four properties.
Where is Best to Buy Property for BTL Investment?
Southampton is currently at the top of the list, with rental returns of 8.73%. Manchester is next with 7.98%, Nottingham at 7.67%, Blackpool has yields of 7.63%, and Hull 7.47%. In all of these places, except Hull, landlords already own one in five properties or more.
Relatively low house prices and strong demand for rental property from high student and young professional populations make for brilliant buy-to-let investments.
The lowest yields found were within London, where recent increases in price have overtaken the rise in rents.
London has a higher proportion of rental property than elsewhere in the UK, with 38% of houses in Westminster being privately rented.
Head of Mortgages at HSBC, Peter Dockar, says: “House prices in the top-yielding locations, while still out of reach among many first time buyers, are relatively affordable for landlords investing in property and the demand from young professionals has pushed up rents and driven up the returns.
“London is often seen as the haven of property investment, with many believing the streets are paved with gold. However, while the highest rents in the country are an attractive draw for landlords, high house prices in the capital squeeze yields and limit the returns available. As a result, returns can often be far more attractive in other areas, so it certainly pays for landlords to do their research.”1
This report uses official findings from the Office for National Statistics and Land Registry.