Southend tops the buy to let property investment market for rental yields according to recent research.
New analysis from Private Finance reveals Southend-on-Sea is the UK’s number one buy to let hotspot for investment, offering average rental yields of 6.6 per cent once mortgage costs are taken into account.
The analysis – which calculates rental yields in the 50 UK towns and cities with the highest proportion of private rental housing stock – highlights that house prices and mortgage costs can be just as influential as rental income when assessing the best locations to invest.
An annual rental income of £23,280 means that landlords in Southend enjoy a lucrative return for a relatively small upfront investment, with house prices in the area only slightly higher than the national average (£279,358 against £231,000).
Four out of 10 areas with the highest rental yields feature in the top ten buy to let hotspots – Westminster, Camden, Tower Hamlets and Southend-on-Sea – but an equal number of areas with the lowest house prices also feature in the top ten list.
Liverpool, Nottingham, Greater Manchester and Coventry all feature in the top 10 and benefit from some of the lowest house prices in the UK, suggesting potential buy to let property investors should not only consider potential rental income when assessing where to invest.
This is also encouraging news for buy to let property investors with smaller sums to invest, demonstrating you don’t need to spend millions to secure a lucrative property investment.
Director at Private Finance, Shaun Church, commented: ‘Southend is a popular spot for renters, with all the benefits of living in a popular seaside town less than an hour’s commute from Central London, and with good airport connections.’
He continued: ‘With the high cost of renting pricing many out of the city, towns in a commutable distance from London that offer a more relaxed lifestyle at an affordable price are becoming increasingly popular among young professionals. Rental demand is likely to grow in these pockets outside of London, offering good opportunities for buy to let investors.’
Top Ten Buy to Let Hotspots by Average Net Rental Yield
| Location | Percentage of Privately Rented Housing Stock | Average house price (July 18) | Average house price (July 17) | Mortgage costs (interest-only) | Average Rent 2018 (Monthly) | Average Rent 2018 (Annual) | Net Rental Yield Aug 2018 |
| Southend-on-Sea | 20.72% | £279,358 | £272,873 | £4,840 | £1,940 | £23,280 | 6.6% |
| Nottingham | 21.64% | £137,835 | £134,019 | £2,388 | £928 | £11,136 | 6.4% |
| Westminster | 37.56% | £970,990 | £1,058,953 | £16,822 | £5,554 | £66,648 | 5.1% |
| Edinburgh | 20.48% | £254,170 | £239,016 | £4,403 | £1,410 | £16,920 | 4.9% |
| Greater Manchester | 26.85% | £167,928 | £160,001 | £2,909 | £911 | £10,932 | 4.8% |
| Liverpool | 21.75% | £136,521 | £127,060 | £2,365 | £725 | £8,700 | 4.6% |
| Tower Hamlets | 30.84% | £473,327 | £449,170 | £8,200 | £2,447 | £29,364 | 4.5% |
| Camden | 30.46% | £810,708 | £865,076 | £14,046 | £4,178 | £50,136 | 4.5% |
| Coventry | 19.02% | £185,990 | £175,375 | £3,222 | £952 | £11,424 | 4.4% |
| Southampton | 23.42% | £212,155 | £205,687 | £3,676 | £1,045 | £12,540 | 4.2% |
Source: Residential Landlord