While buying in London has proved to be a lucrative move for many property investors looking for capital gains in recent years, it is increasingly holding less appeal for those seeking a generous monthly income.
ndeed, it is the sharp rise in house prices seen in the capital that is prompting income-searching investors to turn their attention to other areas.
In particular, it is the so-called commuter hubs that are generating a buzz in the world of property investment. These include commuter towns such as Swindon and Luton, where the combination of lower house prices and growing rents are proving to be a winning formula for landlords.
Recent data from flatsharing website SpareRoom.co.uk found that rents in these two commuter towns are growing four times faster than in the capital.
High house prices in central London have pushed people into rental accommodation - and in turn, demand among rental properties in London has become so aggressive that tenants are looking further out. These areas can be a good option for landlords looking for a competitive rental yield of 5 per cent or more.
Looking farther afield
Rents are also increasing in other cities such as Reading and Bristol, according to SpareRoom.co.uk.
Meanwhile, Assetz for Investors recommends cities such as Manchester and Liverpool, where - it claims - investors can secure rental yields of up to 5.7 per cent. The common denominator for all of these commuter hubs is that they attract tenants as they offer good transport links and lifestyle amenities.
However, the key for any property investment is to do the figures because if they don’t add up and produce a yield that you are seeking, then the deal will be off the table. It is all about ensuring that your money is working is as hard as it can.
Where can I achieve rental yields of more than 10%?
While commuter hubs are becoming popular among landlords due to a boost in demand for rental properties in the areas, it is important not to overlook off the beaten track areas that can also offer attractive rental yields.
One region that can offer returns of more than 10 per cent is a place called Washington in Tyne & Wear. For example, a two bedroom flat in the area is on the market for £25,000 and currently has tenants paying £325 a month.
This produces a yield of 15 per cent, based on a basic calculation of dividing the annual rental income by the property’s capital value, and then multiplying by 100.
Where will you be looking to buy-to-let? We’d love to hear your thoughts below.