Buy-to-let has been a strong asset class for decades within the UK. As the property market is changing and the UK’s economic status is fluctuating, traditional buy-to-let properties are still a sure favourite for property investors within the UK as well as savvy property investors overseas.
Even after the recent tax crackdown buy-to-let properties are still attractive to investors for the passive income and high yields. During this time of low interest rates and unpredictable stock markets property investors are still purchasing buy-to-let properties to gain a regular rental income, even using them to build a portfolio to increase their capital.
Where To Look For Buy To Lets With High Yields in the UK
The average rental yield of buy-to-let properties in 50 major cities and towns across the UK was recorded by property lender, Kuflink. Properties in the Manchester and Salford area in the North West was found to be at the top of the list, leading with an average rental yield of 6.7% and 6.6% respectively.
Areas such as Hull, Rotherham and Luton were the areas that had the biggest increase in average rental yield over Q4 2016.
Even though the rents are higher in the south of England, in particular towns such as London, the rental yields in the north of England have been found as typically higher. This supports the fact that properties in the south cost a lot more than the north, which means that the buy-to-let landlords in the south are left with relatively low returns on their investment.
The town with the lowest rental yield from the 50 major cities and towns included in the research was Cambridge in the east of England. The historic city of Cambridge is a popular commuter hotspot and it provides investors with the lowest average rental yield at just 2.7%.
Birmingham saw the largest drop in properties available for under £250,000 with a big decrease of 1,373 between October and December in 2016. The area with the next largest decrease in properties that fit the under £250,000 bracket was Bristol with a decrease of 1,017 properties.
The CEO of Kuflink, Tarlochan Garcha acknowledged the rift between the north and the south is continuing but more attention is turning to the north. Buy-to-let investments in the north of England is becoming a steady investment with higher returns. Garcha then continued to say that the cities Manchester and Leeds are both busy cities popular with professionals, families, and young people which offers solid returns to landlords.
It may be time for investors to focus on buy-to-let properties outside of London. For example, Birmingham has a growing business district and is soon to benefit from HS2 meaning that journey time to London is reduced to just 49 minutes. On top of that is a strong buy-to-let spot.