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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.”

New LHA Rates for 2014 -2015 Published

New LHA Rates for 2014 -2015 Published

Local Housing Allowance (LHA) Rates Change In April

Every year the Government publish Local Housing Allowance (LHA) rates that are periodically reviewed and payment levels in some UK regions may change without notice.

The April 2014 – March 2015 LHA rates have now been published and the revised list makes interesting reading for landlords and letting agents who are willing to accept tenants claiming benefits.

UK private rental sector landlords are able to ensure rental property profits by allowing their properties to be let to tenants claiming housing benefit (HB), with local authority rental payments exceeding buy-to-let mortgage payments.

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Government Seek Bids For Build-To-Rent Scheme

Government Seek Bids For Build-To-Rent Scheme

Build-To-Rent scheme seeking bids from property developers to help bring about the fastest rate of affordable residential property construction for two decades 

UK Government Housing Minister, Mark Prisk, last week announced a second round of funding for the construction of new rental properties and the government are seeking fresh bids for a share of at least £400 Million (GBP) to build new properties specifically for the private rental sector (PRS).

The funding is part of the flagship £1 Billion (GBP) Build-To-Rent fund, which offers support for property developers and property investors who want to get into the private rental sector for the first time.

Mr Prisk said the new Build-To-Rent scheme would encourage investment in the UK’s private rental market and offer prospective tenants a greater choice of rental property. The scheme is intended to run alongside up to £10 Billion (GBP) in government housing guarantees.

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Southampton City Council are set to decide on plans to impose compulsory licensing for all Houses of Multiple Occupation (HMO’s) within the city.

Over 6,500 HMO’s are currently registered within the city limits however only 392 are licensed; and the council are reported to have a significant problem with rogue landlords.

If councillors decide on a public consultation, landlords, tenants and letting agents may get the opportunity to lobby against the idea and will be able to put their views across regarding the nature and scope of the proposed HMO licensing scheme.

However the scheme is widely tipped to go ahead regardless and the £500 licensing fee that will apply to each individual property will quickly become a reality for HMO landlords in the city.

A Southampton Council spokesman commented, “Although the council recognises that there are many good landlords, this sector, concentrated in the north and central areas of the city, has some significant problems. Research suggests that within the 6,500 properties affected, there is evidence of unsatisfactory management, disrepair, inadequate safety standards and community harm.”

Roger Bell of the Southern Landlords Association (SLA) has a different viewpoint though and considers the proposed licensing fee ‘unjustified’. He also believes that the cost will be passed on to tenants in the form of rent increases, and recently said, “The cost will be passed on to those least able to pay it. These are people due to force of circumstance who are forced to live in HMO’s.”

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