Landlords can still achieve double-digit returns despite the recent pressures they’ve faced, according to new figures.
Rising house prices, increased stamp duty, and reduced tax relief mean many have seen their finances squeezed.
Now, new research by TotallyMoney has looked at annual yields on 580,000 buy-to-let properties across Britain and found that some cities offer returns of almost 12 per cent.
In particular, the research suggested university cities can offer the best returns, with Liverpool, Manchester, Middlebrough, Newcastle upon Tyne, and Edinburgh being the top performers.
In Liverpool, the postcodes L7 and L6 take first and second place, with average rental yields of 11.79 per cent and 11.59 per cent respectively. The postcodes are close to two of Liverpool’s three universities, making it a potential hotspot for buy-to-let investors.
Middlesbrough’s TS1 town centre postcode, home to Teeside University, takes third place, with an average rental yield of 10.94 per cent. The area also has an average asking house price of just over £65,000, making it one of the most affordable buy-to-let hotspots.
In Edinburgh, postcode EH8 comes fourth, with average yields of 10.62 per cent. It’s home to the University of Edinburgh, which is the sixth best in the UK, according to the Times Higher Education World University Rankings.
With a student population of 100,000, Manchester also performs well. M14 has average rental yields of 10.08 per cent and is home to Manchester Metropolitan University.
By contrast, London was one of the worst areas across Britain for buy-to-let yields, with north London faring particularly badly. Of all the London postcodes surveyed, five north London postcodes rank in the bottom 10, with rental yields as low as 1.5 per cent.
Outside of London, the worst performing area was Bournemouth’s BH14, which has average rental yields of 1.68 per cent. Crewe’s CW12 comes next, with 1.74 per cent.
Joe Gardiner, of TotallyMoney, said: “With students flocking to university cities year after year and looking for a place to live, it’s no surprise the student market is a dependable one for landlords.
“Since so many students are looking for accommodation, landlords may use this as an opportunity to drum up competition between them.
“But, due to the tenant fee ban, changes in mortgage tax relief, and tighter buy-to-let lending criteria, rental profits are now being squeezed more than ever. To maximise their returns, landlords need to be savvier.”
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2020 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.