Keen to invest in the buy-to-let market, but not sure where you’ll find the best returns? We spoke to Matt Stevens, Director of The Mortgage Genie, about where investors can find the best rental yields.
With Brexit on the horizon and mortgage rates on the rise, there’s a great deal of uncertainty surrounding the future of the UK’s buy-to-let market. One thing is certain, however: smart landlords are avoiding London, where high property prices and stagnating rents are eating into profits. Rental yields in some central areas of the capital are now as low as 2%, according to Portico, meaning that investing in property in the city is perhaps not as lucrative as it once was.
If you’re looking to expand your buy-to-let portfolio this year, you may want to consider investing your cash in the North and Midlands, instead. Once seen as investment no-go zones, many northern cities are now undergoing a renaissance, with new transport links and urban renewal projects making them desirable places to live.
Here, I’ve shared three investment property hotspots you’ll want to consider, including tips on yields and the potential for future capital growth. Keep reading to find out more.
A vibrant modern city with plenty of high-quality affordable housing, Leeds is an increasingly attractive prospect for many buy-to-let investors. Landlords in LS1 postcodes can currently expect to see yields as high as 6.1% for a one-bed flat, according to Property Data.
The city’s economy is one of the best in the north of England, with a thriving jobs market and plenty of opportunities for young professionals. The arrival of the HS2 Leeds to London line looks set to boost an already buoyant economy, and could even make Leeds a potentially desirable spot for those with links in London, which is sure to drive up property prices in the long-term.
Now a thriving metropolitan hub with a rapidly expanding housing market, Liverpool is an extremely promising opportunity for investors. The city currently has one of the highest rental yields in the country, with landlords in some parts of the city seeing yields as high as 12.63% (Totally Money). The L7 postcode offers especially high rental yields, owing to its central location and proximity to two of the city’s four universities.
Not only does Liverpool offer some of the healthiest rental yields in the country, but it’s also highly likely that rents will skyrocket in the next few years. Large-scale investments like the Liverpool Waters scheme are bringing more jobs to the city, making it an increasingly attractive place for young professionals looking for long-term rental accommodation.
First time investors and those looking for a bargain will want to consider buying property in Hull, which currently boasts some of the most affordable housing in the country, according to the Daily Mail. With an average property costing just £119,636, investors can expect healthy rental yields of around 5.7% in the city centre, according to Property Data.
There are plenty of reasons why the city is likely to become an increasingly desirable destination for young professionals, too. Hull was the UK’s City of Culture in 2017, which saw the city benefit from a number of public and private investment schemes, including the opening of the Ferens Art Gallery and the renovation of the Hull New Theatre. There’s also the Council’s £250 million Hull City Plan, which is poised to create 7500 new jobs and completely revitalise the city centre. That’s sure to have a very beneficial effect on property prices, too.
With the sluggish London market offering lower rental yields, the Northern Powerhouse is starting to look like a much safer bet for investors. So, if you’re on the lookout for a new buy-to-let property, consider the hotspots I’ve listed here — you could find your next success story.