According to new research, buy-to-let investors should be looking at the likes of Birmingham, Merseyside and Kent postcodes to receive the highest yields on their investments. Nationwide data suggest landlords should avoid buying in Greater London, where the yields average less than 4%, compared to other buy-to-let hotspots returning 10%.
Online renting agency Let Britain is highlighting this relevant research to its clients who may be looking to expand their bulk of properties this year. The new data uncovered shows that the higher yields generally occur outside the copious rents of London, in scattered areas around the UK. The study was conducted last year on two bedroom properties advertised online for rent and for sale, and underlines that while London’s rent prices are notoriously high, the properties are also extremely expensive to buy for investors.
Fareed Nabir, Director of Let Britain, says, “The private rental sector is constantly developing, and this new insight gives buy-to-let investors food for thought. Central London is obviously the most expensive area to buy so won’t produce a high yield, but commuter rings on the West and East outskirts may continue to be hotspots as they will always be in high demand and the property prices are lower. But professional landlords should look further afield into the country’s top yielding postcodes, mainly Birmingham, Kent, Merseyside and Surrey who can all boast over 9.5% yields. The good news for landlords just keeps arriving, with the average investor in England and Wales expected to make a return of £14, 735 per property in 2014.”
In light of the enlightening study, potential investors are faced with the difficult decision of buying a property close to home or chasing a yield further afield. While it makes business sense to search in the regions that return a higher amount, being in a different location to a rented property can cause issues. Investors should undertake their own personal research in the desired unfamiliar location, and get to know property management companies in the area.
Fareed Nabir adds, “Whilst it is tempting to chase larger yields in regions all over the country, it can be concerning, especially for first time buy-to-let investors. Long distance landlords have a lot to consider, especially if they need any maintenance work doing to the house or don’t have information about transport links and education in the area. Let Britain can assist landlords in advertising their property located in a different part of the country, as it is a completely hassle free, virtual service.”