University cities offering highest buy to let yields revealed in survey
Study has revealed best university cities for buy to let yields, making them potentially lucrative hotspots for landlords, says new research
University cities offer some of the highest buy to let yields, making them potentially the most lucrative hotspots for landlords, says new research
An analysis by credit experts TotallyMoney of 580,000 properties across England, Scotland, and Wales found that locations with a high student population such as Nottingham, Liverpool, Manchester and Leeds have some of the UK’s highest rental yields.
Nottingham is top with two postcodes featuring in the top five. NG1 takes first place with an average rental yield of 11.99%, and NG7 takes fifth place with an average yield of 8.89%.
The report points out that property prices are also affordable, averaging £152,631 and £160,269 respectively, below the UK average of £226,906.
Liverpool takes second place, with two postcodes in the top five, and five postcodes in the top 20. It has an approximate student population of 70,000, as well as three universities, which is thought to contribute highly to its strong yields.
Postcode L7 takes second place and has average rental yields of 9.79%. L1 also performs well, taking fifth place, with average yields of 9.33%.
Newcastle’s NE6 takes sixth place, with an average rental yield of 8.43%. Property prices here are far below the UK average at £118,789, with Newcastle and Northumbria universities approximately 30 minutes away on public transport.
London struggled to perform well compared with its UK counterparts. North London in particular was a poor performer, with five postcodes in the bottom 10. Highgate in N6 was the worst postcode in the capital and third from bottom overall, with paltry yields of just 1.93%.
Landlords whose hearts are set on the capital need to head east for the best return on investment, it suggests as E6 in East Ham offers the best London yields at 4.81%, with Stratford (E15), Plaistow (E13), Poplar (E14), and Chingford (E4) all ranking in the London top 10.
It’s thought that higher than average house prices and tighter mortgage lending criteria have contributed highly to the poor rental yields in London. Some buy to let mortgage providers now require rental payments to cover mortgage repayments by a surplus of 45%, making it harder for landlords to turn a profit.
Head of brand and marketing communications at Totally Money, Mark Moloney said 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.
Moloney said, 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.