As one of our most popular articles, we have updated this for 2017.
Landlords looking to buy property should be turning their attention to the commuter towns around London, according to research on the best places to buy-to-let in the UK for 2017.
The latest buy-to-let index from LendInvest names Romford in East London as the best buy-to-let area, with rental yields of 5.24 per cent and capital gains of 16.55 per cent. Romford’s local rental market has picked up pace over the last few months, and the town has climbed six places to reach the top of the table.
Luton in Bedfordshire and Dartford in Kent are in second and third position, with rental yields of over 4.7 per cent. They’re both popular commuter towns within easy reach of London.
But when it comes to rental price growth, several towns in the Midlands have shown steep increases, pegging these places as ‘ones to watch’ for buy-to-let investors.
Buy-to-let in London’s commuter belt
The buy-to-let index is compiled using data from the Land Registry and Zoopla, and ranks postcodes based on the key metrics of rental yield, capital gains, rental price growth and transaction volume growth.
To calculate rental yield, the annual rent received on a property is taken as a percentage of its market price.
According to the index, commuter belt towns with good links to the capital are currently the best bet for investors. Joining Romford, Luton and Dartford in the top five are Rochester in Kent and Watford in Hertfordshire. Travel time from Watford into London is just 15 minutes on the train, while you can reach the capital in around 35 minutes from Rochester.
However, if it’s rental yield that you’re most concerned about, Northampton in the East Midlands may be worth exploring. Although it only comes eighth in the overall rankings, Northampton comes second for rental yield, offering 4.77 per cent average yield. Again, it’s a well-connected town, with both Birmingham and London only an hour away by train.
These are the top 10 buy-to-let locations according to LendInvest’s buy-to-let index:
Healthy capital gains in the South East
Along with a high annual rental yield, property investors will also want to make a profit on their property when they come to sell.
Here, it’s a similar story, with well-connected towns in the South East doing particularly well in terms of capital growth. Surprisingly, central London has slipped off the list.
Dartford leads the pack with gains of 17.75 per cent, followed by Watford and then East London town Ilford.
Top 10 areas for capital gains in the UK
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Rental prices rise in the Midlands
When it comes to rental price growth, the Midlands is looking strong, with places like Coventry, Northampton and Milton Keynes appearing in the top 10, alongside usual suspects like Romford and Luton.
Stevenage in Hertfordshire, which is only placed tenth in the overall rankings, is number one for rental price growth, showing an increase of over 10 per cent. Again, it’s a popular commuter town, boasting good connections to the capital.
Top 10 areas for rental price increase in the UK
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Best areas to buy-to-let - heat map
From Romford, rated as the best area to buy-to-let, to Galashiels - rated 105th, and last on LendInvest’s BTL rank - check out the heat map below for an overview of where’s hot in the UK property scene.
Image source: LendInvest