It goes without saying that, if you’re looking to buy your first rental property or expand your existing buy-to-let portfolio, you’ll want to get the best possible return on your investment. And, there are a number of ways in which you can give yourself the best chance of making a healthy profit.
Firstly, you need to ensure you know how securing a mortgage for a buy-to-let property is different to when you’re buying a home for yourself. This will help you to prepare for any extra costs you’ll need to pay. If this is the first time you’ll be purchasing a property to rent out, The Mortgage Genie has a guide to buy-to-let mortgages that can walk you through everything.
Secondly, any seasoned landlord will tell you that, in order to secure a high rental yield, you’ll need to choose the location of your next property wisely. In the capital, property prices are continuing to rise, but the amount of rent tenants can afford to pay is stagnating. This means that investing in London properties isn’t as lucrative as it once was, and smart landlords are moving further afield to buy more affordable properties in other bustling areas of the UK.
To help you with this aspect of the buy-to-let process, we’re going to point you in the direction of some of the UK’s property hotspots where you’ll yield the highest rental returns. The cities below boast relatively affordable properties and plenty of potential tenants with cash to splash, which means they’re great locations for landlords looking to make a profit. Read on to learn where you should be looking to buy your next property.
The city of Leeds boasts plenty of high-quality but affordable housing, and investors who buy property in the city centre can expect to see rental yields as high as 6.1%, according to Property Data.
Leeds has a huge student population and, thanks to its abundance of employment prospects, it’s become a hive for young professionals in the last few years. So, there’ll certainly be no shortage of people looking to rent houses or flats near the city centre.
Additionally, Business Quarter has reported that house prices in Leeds are expected to increase by 21.6% between 2017 and 2021. This means that now is a great time to buy and, if you do eventually decide to sell up, it’s likely you’ll make a healthy profit from the sale.
Liverpool is a thriving metropolitan hub with a rapidly expanding housing market. As a result, it’s becoming an increasingly promising location for landlords.
The city currently boasts some of the best rental yields in the UK, which can be as high as 12.63% in some areas, according to figures from Totally Money. Thanks to the central location and how close it is to two of Liverpool’s universities, landlords who buy in the L7 area tend to see a particularly healthy return on their investment.
It’s set to become an even more attractive location for young professionals, too, as there are several large-scale investments in the pipeline, which are set to bring more jobs to the city. You can learn more about these developments on the Regenerating Liverpool website.
Now is an incredibly exciting time to invest in Manchester’s property market. Many consider the city to be the unofficial capital of the North, thanks to the amount of money that’s being spent on regenerating the area, and the fact that new businesses and building developments are being brought to the city all the time.
Simply Business says that the M6 postcode offers the best rental yields at 8.25%, while M14 postcodes are also very attractive, offering an average rental yield of 7.98%. In terms of the areas you should be looking at, Salford, Tameside, and Manchester city centre all have great transport links and high-quality housing, making them very attractive to potential tenants.
Plus, the city has a student population of 80,000, which means it’s a great location for anyone who’s looking to offer student lets. Fallowfield and Chorlton are suburbs that are particularly popular with students so, if you’re looking to buy a property that’s going to attract student tenants, make sure you consider these areas.
Looking for a low-cost and low-risk investment that’s almost guaranteed to offer a healthy rental yield? If so, Gateshead is the place for you.
The River Tyne separates Gateshead from the city of Newcastle, which boasts a plethora of career opportunities, plenty of cultural events, and some of the best nightlife in the UK. As a result, the area is becoming increasingly attractive to professionals, which means more and more people are flocking to Tyne and Wear in the search of a house or flat to rent.
The cost of housing in Gateshead is still 46% below the national average, according to The Telegraph. So, when considering where to purchase a buy-to-let property, you’d be silly to miss this north-east town off your shortlist. Especially since you could see an average yield of 7.6% from a one-bed flat in the town centre (Property Data).
If you’re after a real bargain, it’s well worth considering the city of Hull, as it currently boasts some of the most affordable housing in the country. Figures from Zoopla show that the average house in Hull is valued at £139,620 and investors who buy in the city centre can expect rental yields of around 5.7%.
It’s becoming an increasingly attractive location for young professionals, too. Hull was named the UK’s City of Culture in 2017, which means it has benefited from a number of public and private investment schemes. The local council’s £250 million Hull City Plan is also set to create 7,500 jobs and breathe new life into the city centre.
If you’re looking to buy your first rental property or want to expand your existing portfolio, make sure you consider these hotspots when choosing the right location. All of the towns and cities we’ve recommended here offer far more affordable housing than London, and many of them will give you a higher rental yield. So, they should definitely be on your shortlist.