The best and most up-and-coming areas for rental yields
New data from HSBC has revealed both the top and most improving towns in the UK for generating rental returns. The top 5 hotspots for buy to let investors are below. Remember that you can check rent levels and returns for specific postcodes with Rentify’s investor tool!
|Location||Average House Price||Average Monthly Rent||Average Rental Yield (Gross)|
|Kingston upon Hull||£68,243||£425||7.47%|
The top 10 is completed by Coventry, Oxford, Portsmouth, Liverpool and Cambridge. The unifying feature of these locations is (generally speaking) their status as university towns, where there is large demand from renting students but lower demand to buy properties, keeping prices affordable for investors and yields high. Southampton and Blackpool, as coastal towns, also benefit from seasonal holiday workers, looking to rent but not buy.
The locations where rental yields are improving at the best rate are as follows:
|Location||Average House Price||Average Rental Yield (Gross)||% Year-on-Year Yield Growth|
|Brighton and Hove||£242,535||6.17%||12.60%|
The strong growth in Reading and Brighton can be explained by the fact that young professionals and families are feeling increasingly priced-out of London – or want more space for their money – and so are moving to these commuter-belt towns. As usual, areas in London fail to chart in high positions on these rankings as house prices are so high that it significantly impacts rental yields. However, London properties will always tend to benefit the most from capital growth.
New mortgage options
Optimism among mortgage intermediaries is currently at its highest level since the financial crisis, according to buy to let specialist Paragon Mortgages. Paragon’s own sales have increased by a huge 163% in the six months to March 31st. This should help to give property investors confidence to seek out new deals if they are considering remortgaging.
Precise Mortgages has revamped its buy to let range with an almost prime range targeting landlords rejected by high street lenders for minor historic credit issues. They are also offering lifetime tracker products for properties with lower rental yields. Three new lifetime tracker products at up to 80% loan to value (LTV) are available from £100,000 loan size in addition to its £250,000 plus range.
Please always consult an expert, independent buy to let broker to find the best mortgage for your circumstances.
Tip of the Week
1.) Make sure you are fully aware of what will happen if you fall behind on your mortgage repayments. It is always worth being prepared, even when times are good. There are many stories of landlords falling into real trouble if they go into receivership. If your property is seized, you face the difficulty of dealing with unregulated receivers. Speak to your lender to make sure you understand the processes if the worst-case scenario does happen.
2.) If your property is in Liverpool, be aware that the Council is currently consulting on whether to introduce selective licensing for landlords. Make sure to send your comments for consideration by 16 June.