Yields revealed: Where in the UK should you invest?

Love may be in the air, but many landlords have not got that warm fuzzy feeling.

With the tax change deadline approaching, the Housing Whitepaper shaking up the housing market and Brexit still hanging over everything like an unknown cloud, it’s a frustrating time to be a landlord – however, for some areas in the UK, 2017 is looking positive!

Research by peer-to-peer lender Kuflink has examined the average rental yields in 50 major towns and cities, and has discovered where in the UK provide the best investment opportunities.

Examining the research, it is clear that the North-West is leading the way, with properties in Manchester and Salford providing high average yields of 6.7% and 6.6%, while Hull, Luton and Rotherham were among the areas that experienced the biggest increase in average rental yield during the tail end of 2016.

Despite it’s fantastic commuter train links, and great student lets, the commuter town fo Cambridge provide the research’s lowest rental yield, of just 2.7%.

So where should I invest?

The top ten towns and cities that provide the best average rental yields are:

Rating TownAverage rental yield (%)
1Manchester6.73%
2Salford6.68%
3Portsmouth5.75%
4Leeds5.67%
5Cardiff5.59%
6Coventry5.37%
7Southampton5.19%
8Nottingham4.90%
9Birmingham4.73%
10
Stockport

4.65%

So where should I avoid?

The ten towns and cities that provide the lowest average rental yields:

RatingTownAverage rental yield (%)
1Cambridge2.73%
2Chester3.04%
3Chelmsford3.07%
4London3.25%
5Wolverhampton3.27%
6Carlisle3.29%
7Doncaster3.39%
8Wakefield3.41%
9Rotherham3.54%
10Northampton3.57%


Where should I keep an eye on?

The ten towns and cities that have experienced the biggest increase in average rental yield (October to December 2016):

RatingTownAverage rental yield change (%)
1Hull0.31%
2Luton0.30%
3Rotherham0.28%
4Swansea0.26%
5Dudley0.25%
6Cambridge 0.23%
7London0.23%
8Aberdeenshire0.23%
9Edinburgh0.22%
10Doncaster0.20%

The rift between north and south continues, but this time the attention is turning north. Buy-to-let properties in the North can be a steady investment, attracting renters who cannot afford to step onto the property ladder and therefore choose to rent in good locations, which are well-suited to their lifestyle. Manchester and Leeds are both bustling cities, popular with young professionals and families, and can offer solid returns for landlords. While Birmingham, which has a growing business district and is soon to benefit from HS2, cutting journey time to London to just 49 minutes, is also firmly on the map as a strong buy-to-let spot. It could be time for landlords to turn their attention away from pricey London and look to the UK’s regional cities.

Tarlochan Garcha, CEO at Kuflink

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