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The Best Property Rental Yields in the UK

The latest research by nationwide Build-to-Let specialist, Sequre Property Investment, has revealed which major cities across England and Wales have seen rental yields stand the test of recent times, despite the government’s attempts to dampen investor appetite through a number of legislative changes.

With changes to buy-to-let tax relief, an increase in the rate of stamp duty on buy-to-let and second homes, and more recently, talk of changes to capital gains tax, you could be forgiven for thinking the government wants to deter investment into the rental sector.

However, the sector continues to prove a lucrative one for those investing in the right areas, and Sequre Property Investment’s analysis found that seven cities, in particular, have performed very strongly in recent years.

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Sequre Property Investment analysed the average rental yield across 21 major cities in England and Wales over the last five years and found that across the nation, rental yields have averaged 5.1 per cent per year since 2015.

The best performing has been Manchester, with rental yields sitting at an average of 5.5 per cent a year.

Sunderland has also performed well at an average of 5.4 per cent per year, with Nottingham (5.3 per cent) and Newcastle (5.2 per cent) also putting in a strong performance.

Cambridge has seen the lowest average rental yield since 2015 at just 3.2 per cent, while Bournemouth is the only other city to also slip below the 4 per cent mark.

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Daniel Jackson, sales director at Sequre Property Investment, said: “The increasing cost of property coupled with current uncertainty within the rental market can make investing into the rental market a daunting business. However, it remains a lucrative venture for those who know where to invest and what to invest in. The key is to know your market and to appreciate that property investment should be undertaken with a long term view, rather than a smash and grab mentality. The historic market health of a given location can provide you with good insight in this respect but top-line rental yields can only take you so far. Utilising the knowledge of those in the sector is the best way to maximise your endeavours, whether it be through a tailored investment to suit your individual circumstances, the ability to access bulk deals that can minimise the initial cost of investing or even access to off-market opportunities that aren’t open to the average buy-to-let investor. All of these approaches can see you secure a far higher yield in any location when compared to the general market.”

BY PETE CARVILL

Source: Property Wire

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Nottingham postcode has strongest buy-to-let yield

Nottingham postcode NG1 is offering the highest rental yields in England, report from credit eligibility and comparison firm TotallyMoney has found.

Nottingham properties provide a yield of 11.99%, with an average asking price of £152,631 and monthly rental value of £1,525.

Other postcodes with strong yields include L7 in Liverpool (9.79%), TS1 in Cleveland (9.45%) and L1 in Liverpool (9.33%).

Mark Moloney, TotallyMoney’s head of brand and marketing communications, 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 — and that’s where our map and mortgage comparison tool can help.”

The worst postcodes in terms of yield are CW12 in Crewe (1.88%), HP9 in Hemel Hempstead (1.91%) and N6 in London (1.93%).

Source: Mortgage Introducer

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Nottingham tops table of UK’s best buy-to-let locations

A survey of more than 580,000 properties across England, Scotland, and Wales by TotallyMoney, which ranked postcodes in order of highest buy-to-let yields, to lowest, found that locations with a high student population, like Nottingham, Liverpool, Manchester, Leeds, and the North East, offer some of the UK’s highest rental yields.

Properties in Nottingham, which has a student population of over 37,000, appears to offer particularly good returns, with two postcodes featuring in the top five.

NG1 takes first place with an average rental yield of 11.99 per cent, and NG7 takes fifth place with an average yield of 8.89 per cent.

Property prices are also affordable, averaging £152,631 and £160,269 respectively – far below the UK average of £226,906.

Liverpool ranks in 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 per cent. L1 also performs well, taking fifth place, with average yields of 9.33 per cent.

Newcastle’s NE6 takes sixth place, with an average rental yield of 8.43 per cent.

Property prices here are far below the UK average at £118,789, with Newcastle and Northumbria universities approximately 30 minutes away on public transport.

Similarly, Newcastle’s NE1 has yields of 8.16 per cent, and is within walking distance to both universities. Property prices, however, are slightly higher at £161,035, but are still below the UK average.

In stark contrast, London struggled to perform well compared with its UK counterparts.

TotallyMoney’s head of brand and marketing communications, Mark Moloney, 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 — and that’s where our map and mortgage comparison tool can help.”

Source: Simple Landlords Insurance

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Predicted Buy-to-Let Investment Hotspots for 2018

No-one invests in property for the fun of it. Every landlord chooses to rent out property in the hope of making money, whether that is through rental yields or capital growth. With that in mind, the location of your investment needs careful consideration if you are going to get a good return on your money.

When choosing an area for your UK property investment, there are practical considerations to think about, such as whether you want something close to you for easier management or it may be because of personal ties in the area. Choosing somewhere with good amenities will make your property more attractive to potential tenants, whilst you also need to consider the level of demand for property in the locale.

When all this is considered, you still need to be aware of the best places to incest to get a healthy rental yield.

Liverpool Property

Liverpool is a city that features highly in most lists of where to buy property. A number of postcodes within the area have the highest average yields in the UK including Edge Hill, Fairfield, Kensington and the city centre itself. The L7 postcode has the huge yield of 12.63%, but with the prices for Liverpool property investment lower than the UK average this could be the hottest of all hotspots. The area is home to three different universities as a well as an increasing number of young professionals, making rental demand in Liverpool high.

Other Liverpool postcodes take second, third, tenth and eleventh place in the list of highest average rental yields in the UK, making it well worth consideration.

North versus South

Whilst the north of the UK is usually thought of to give better value for money, it is actually Plymouth that takes the next spot on the list below Liverpool. The average yield of 10.15% leaves it sitting pretty above the 10.06% of Cleveland, 10.04% in Preston, 9.57% in Dudley and 8.91% in Nottingham.

Manchester is another city that makes multiple appearances in the list, its highest average yield being found unsurprisingly in Salford. This 8.25% yield is probably largely due to the influx of professionals wanting to work in or near the newly located MediaCity.

Whilst there a few anomalies, the north of the country makes up the majority of the list of highest yields in the UK, and it will not be a shock to many to discover that London makes up a good proportion of the worst performing areas. Despite the fact that rental prices in London are the highest in the country, the incredibly high property prices mean that much of the rent that is recovered will simply be paying for your extremely high investment. Bournemouth actually takes the honours of having the lowest average yield of just 1.41%.

Smaller Areas

What these postcodes show us is that strong rental yields can be limited to small areas, and these are often the ones that are undergoing significant regeneration. Low entry points are attracting landlords from all corners of the UK, but it is important to keep an eye on the market, as popular areas are seeing the market being driven by investors rather than renters which could end up leading to the problem of oversupply.

As property prices rise and lenders become more cautious, getting a decent return on invest is more of a challenge than it used to be. Before investing you need to have plenty of information at your disposal to make sure you put your money in the right place.

Source: Easier

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Renting by the room brings biggest yields

Houses of multiple occupation (HMOs) – properties which are rented by the room – produced the highest buy-to-let yields in 2017, according to the latest figures.

Data compiled by Mortgages for Business showed average yields of 8.9 per cent for houses were many people rent rooms individually.

However, this represents a fall, and the first time that yields for this type of property have dipped below nine per cent since the  Mortgages for Business index was launched in 2011.

Experts at the firm said that the fall was due to the increasing popularity of this type of property with landlords, which is pushing up prices.

“The attractiveness of HMOs as a buy-to-let investment has increased in recent years not only because of the higher yields on offer but because serious investors are keener to diversify their portfolios,” said Jeni Browne, sales director at Mortgages for Business.

“With more landlords vying for these properties, prices have been pushed up more quickly than the rents which, I would suggest, is one of the main reasons we are seeing their yields drop, although, I suspect that the granting of fewer new HMO licences is also having an impact.”

She added the figures showed landlords opting for cheaper ‘vanilla’ properties.

Defined as normal 2 to 3 bed houses and flats, usually fitting the general lending criteria of mainstream buy-to-let lenders, these properties produced average yields of 5.6 per cent in 2017.

The average value of a vanilla buy to let property in 2017 was £305,283, a 19 oper cent decrease on the average in 2016 (£375,409).

Ms Browne added there was anecdotal evidence landlords are looking further afield, where prices are cheaper.

Whilst there was no change in the number of lenders operating in the sector in Q4 2017, the number of mortgages available continued to rise, the figures showed.

There has been a 444 per cent increase in buy-to-let mortgage products since the index was launched in 2011.

Ms Browne said this rise resulted from lenders responding to the growing popularity of buy to let by offering a seemingly ever-expanding range of products to suit a variety of properties and borrowing requirements.

However, she said that this was likely to have reached its peak.

“Looking forward, it is widely anticipated that buy to let lending will contract this year in response to the tax and regulatory measures being imposed on the sector.

“As such, I would expect product numbers to peak in Q1 2018 and we have already seen some lenders trimming their ranges, leaving a core of great products which have been designed to reflect the changing needs of landlords,” she said.

Source: FT Adviser