Best buy-to-let areas in the UK 2016

Landlords should be turning their attention to the North West and the South East according to research on the best places to buy-to-let in the UK for 2016.

Whilst the South East is the clear winner when it comes to capital gains and return on investment, the North West – and particularly Manchester – can’t be beaten for average rental yields.

Despite impending tax changes and potential interest rises, research suggests buy-to-let can still be profitable. And here’s where would-be property investors should be placing their chips…

Buy-to-let in the North West

If rental yields are top of your priority list, look no further than the North West. With Manchester and Liverpool showing the two highest average annual rental yields of 6.02 per cent and 5.16 per cent respectively, Oldham also makes the top five (4.98 per cent).

To calculate rental yield, the annual rent received on a property is taken as a percentage of its market price. You can see the top 10 according to Lendinvest’s buy-to-let index below:

  • Manchester, 6.02%
  • Liverpool, 5.16%
  • Cardiff, 5.10%
  • Coventry, 5.02%
  • Oldham, 4.98%
  • Sunderland, 4.97%
  • Luton, 4.91%
  • Southend-On-Sea, 4.87%
  • Outer London, 4.86%
  • Rochester/Medway, 4.79%

Capital city gains

Along with a high annual rental yield, property investors will also want to make a profit on their property should they wish to sell.

Inner London inevitably tops the list when it comes to capital growth (by quite some distance), with an annualised return of 7.81 per cent.

Outer London (5.59%) and its surrounding areas dominate the rest of the list for best buy-to-let areas in the UK when looking at capital gains. Here are the top 10:

  • Inner London, 7.81%
  • Cambridge, 5.99%
  • Watford, 5.35%
  • Outer London, 4.59%
  • Oxford, 3.90%
  • St Albans, 3.84%
  • Milton Keynes, 3.83%
  • Stevenage, 3.81%
  • Reading, 3.75%
  • Brighton, 3.68%

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Return on investment

In an ideal world, landlords will want to make good money whilst renting their property and a sizeable profit when they decide to sell. Return on investment takes into account both rental yield and capital growth.

And despite a generally diverse landscape when it comes to the best places to buy-to-let in the UK for rental yields, for overall return on investment, the South comes up trumps.

Again somewhat inevitably, Inner London tops the pile by some way with a whopping annualised return of 14.81 per cent.

And the South and South East make up the entirety of the top 10 for ROI:

  • Inner London, 14.81%
  • Ilford, 11.16%
  • Outer London, 10.36%
  • Cambridge, 10.30%
  • Watford, 9.72%
  • Luton, 8.30%
  • Southend-on-Sea, 8.32%
  • Milton Keynes, 8.45%
  • Brighton, 8.38%
  • Oxford, 8.35%

However, with house prices significantly higher in the south of England, investors may feel safer – or indeed financially more able – investing in the North West.

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