UK Cities With Best and Worst Property Investment Yields

UK Cities With Best and Worst Property Investment Yields

Best And Worst UK Property Investment Hotspots

Rental returns on buy to let properties are best in cities like Southampton, Manchester and Nottingham, where as many as one in four properties are owned by landlords in the private rented sector.

Portfolio landlords and property investors are looking beyond London to identify regions where rental yields are almost three times as high as in the capital.

Rental yield is calculated by measuring the rental income against the properties cost

The latest data on buy-to-let yields provided by the HSBC bank, also shows the proportion of properties in each area that are already owned by landlords, with landlords already owning more than one in four properties in many of the top-yielding areas.

HSBC’s report draws on official data from the Office for National Statistics (ONS) and the UK Land Registry with rental data provided by Home.co.uk.

Top Property Investment Hotspots Revealed

Top Property Investment Hotspots Revealed

  • Southampton, currently tops the list for rental returns with rental yields of 8.73% Manchester has rental yields of around 7.98%
  • Nottingham has rental yields of around 7.67%
  • Blackpool has rental yields of around 7.63%
  • Hull has rental yields of around 7.47%

In all of these areas, except Hull, private rental sector (PRS) landlords already own more than one in five properties.

These areas offer relatively low property prices and have strong demand for rental property from large student and young professional populations – the characteristics that the experts say make for excellent buy-to-let investments.

Top 10 Property Investment Hot Spots By Rental Yields

Rank

Location

Housing privately rented (%)

Average house price

Average monthly rent

Gross rental yield (%)

1 Southampton 23.42 £143,011 £1,040 8.73
2 Manchester 26.85 £104,244 £693 7.98
3 Nottingham 21.64 £86,000 £550 7.67
4 Blackpool 24.16 £77,899 £495 7.63
5 Kingston upon Hull 19.02 £68,243 £425 7.47
6 Coventry 19.02 £110,029 £650 7.09
7 Oxford 26.11 £254,514 £1,489 7.02
8 Portsmouth 22.28 £146,709 £795 6.50
9 Liverpool 21.75 £91,175 £494 6.50
10 Cambridge 23.91 £185,414 £1,001 6.48

The lowest rental yields were registered in areas such as London where recent property price rises have outpaced the growth in rental yields and in some areas like Westminster 38% of property is privately rented.

Worst 10 Property Investment Areas By Rental Yield

Location

Housing privately rented (%)

Average house price


Average monthly rent

Gross rental yield (%)

Kensington and Chelsea 33.97 £1,236,605 £2,968 2.88
Thanet 21.96 £189,362 £524 3.32
Hastings 27.19 £184,787 £520 3.38
Haringey 30.33 £425,541 £1,200 3.38
Westminster 37.56 £890,272 £2,578 3.47
Hammersmith and Fulham 30.05 £685,797 £2,004 3.51
Richmond upon Thames 20.55 £540,379 £1,699 3.77
Camden 30.46 £715,831 £2,383 3.99
Ipswich 18.75 £158,925 £546 4.12
Lincoln 19.36 £124,789 £433 4.16

Head Of Mortgages at HSBC Peter Dockar, said: “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.”

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