Taking into account their stamp duty bills after recent tax changes, alongside average house prices and average rental yields, the Index looks at what property investors can buy across the country for a range of different budgets (£250,000, £500,000, £750,000 & £1 million).
All price brackets, rental properties in Inner and Outer London offer consistently less attractive investment opportunities to those in other parts of the country when price, yield and stamp duty tax are considered equally.
Buying multiple properties - particularly in the North East and North West - will often generate the same or better rental yields, while demanding as much as 50% less stamp duty, compared with one property in Inner London that costs the same.
Data-driven examples:
• For £250,000, investors could buy a single studio flat in South East London or two 3-bed properties in Durham with a 200% higher rental yield and 30% lower Stamp Duty bill
• Spending £500,000 in Bradford would secure a landlord five two-bed properties with an average rental yield 40% higher than the average one-bed flat in West London, while paying almost 50% less Stamp Duty
• Ten studios in Sunderland cost less than one three bed house in NW London (£750,000), while earning a 28% higher average annual yield and demanding 55% less stamp duty
• For landlords with £1 million to invest, ten two-bed flats in Liverpool would earn 20% higher annual yield for less than 50% the stamp duty than the same size apartment in East-Central London.
Christian Faes, CEO and co-founder of LendInvest, said: “London rentals have long been seen as a market within a market, and the results of this study emphasise that fact. It’s no surprise that you can get as many as 10 similarly-sized properties in some cities for the same price as a single property in London. But it is surprising that those non-capital properties offer a far more impressive rental yield, and a smaller total Stamp Duty bill to boot.
The current market is creating a huge opportunity for “cross-country landlords” - professional landlords who live in one city, but rent out houses in other cities across the UK. Cities like Brighton and Southampton are becoming more popular with commuters thanks to the transport links into London, and developments like HS2 will prove an additional boost to areas in the Midlands and beyond.”
