The Best Buy-to-Let Hotspots & The Top Predictions for Aspiring Landlords
16th August 2016
If you are looking to expand your property portfolio or you’re an aspiring landlord, then finding the areas which have houses with the highest yield will be your priority. While popular areas in cities such as London have seen gains squeezed due to the rising cost of property, there are some buy-to-let hotspots in the UK that can help you get the best return on your investments. Thankfully, prospective landlords can discover these gems, some of which we’ll be looking at below. See below for the best buy to let hotspots for aspiring landlords as well as the top predictions of up and coming areas:
The key to long term success for buy to let landlords is finding and investing in areas that will bring them strong rental yields for income and the potential for the property to gain in value over time as well. Over the past five years, the North West of England has been the most lucrative in terms of annual letting returns for landlords as prices in the south have squeezed bottom lines. Conversely, property owners in the South have benefitted from the stratospheric rise in house prices to profit from the housing boom there.
For investors looking for the current hotspots, here are the top buy-to-let areas right now:
York, Yorkshire: With an average price of around £149 000 and an expected rent of up to £10 000 on the same property, a gross yield of just over 6%, areas of York can present high rental yields for aspiring Landlords and investors.
Manchester: Manchester is one of many northern cities that are proving to be high yield earners for property investors at the moment. With billions in government infrastructure spending set for current and upcoming projects, the area is predicted to achieve some of the highest rental yields in the country, as well as 22% growth in property inflation.
Hull: The Yorkshire town of Hull was recently named as one of the leading buy-to-let coastal towns in England by topping polls with rental yields of 10.7%! To find out your potential returns on a property, you can use a Landlord Yield Calculator to ensure you make informed decisions on your property purchases. The results show that avoiding obvious areas and choosing northern areas such as Hull tends to be more lucrative.
London: Although sky-high prices have squeezed rental profits, the cost of lettings has also risen sharply while other areas are worth considering as their prices do not yet reflect the boom sweeping across parts of the capital. In areas such as Ealing in West London for example, landlords can still expect to get a gross yield of just over 5% on a 2 bedroom property that costs up to £290 000! This is because the average annual rent for such a property can be as much as £17 000, hence the healthy returns. Other buy-to-let hot spots in London include Newham in East London, Wandsworth in the South West, and Southwark in the South-East.
Oxford, Oxfordshire: The University town is not only a popular tourist destination, but a great investment area for buy-to-let investors as well. The area is frequently cited in many buy-to-let lists and is a safe bet because of the high demand for rental properties in the area from students and visitors.
Cambridge, Cambridgeshire: The average price of a two bedroom property in Cambridge is around £190 000. With achievable rents of up to £11 000 per annum bringing in a gross yield of almost 6%, the town is another hot spot for rental landlords with demand driven by students.
Sheffield City Centre, South Yorkshire: Sheffield is another Yorkshire town seen as a hotspot for prospective landlords particularly in the town centre.
Predicted Future buy-to-let Hotspots
Going forward, finding the buy-to-let property hotspots that will bring aspiring landlords the highest yields is also crucial for any serious investor. A good indicator of up and coming areas that are worth investing in before prices go up are large infrastructure projects planned for the future. For that reason, the city of Manchester should be noted as a predicted future buy-to-let hotspot, as the area undergoes a massive government-backed regeneration project.
Other areas predicted to be prime investment opportunities include Rotherham, Birmingham, Leicester, Norwich and Kent. Infrastructure projects such as Cross Rail and HS2 mean that towns and villages along the route of these major works should also be considered.
While the high cost of property in London can be a barrier to aspiring landlords or those looking to expand their portfolios, there are still some areas that provide sound investment opportunities. From low property prices and high rental yields due to demand, to planned infrastructure projects that will rejuvenate neglected areas, there is scope for ensuring you get a good return on your investment.