Landlords

Where are currently the most profitable BTL locations in the UK?

Property Reporter
|
10th May 2021
Question 709

With average returns on investment for renting out a property in the UK sitting around 5%, it's fair to say that BTL is still a sound investment. However, this can vary drastically depending on where you choose to invest, according to new data released by Address Intelligence.

For example, investing in a rental property in Sunderland can earn an investor 7.27% back in rental payments in year one. The average monthly rent is £697, and it would take an investor 14.2 years to pay off their property.

The top 10 places to invest in a rental property:

Sunderland
Blackburn
Durham
Blackpool
Oldham
Cleveland
Liverpool
Wigan
Bolton
Manchester

When split by property type, a terraced house in Sunderland makes the greatest return, with semi-detached and bungalows coming in second and third. Terraced housing in Blackburn, Blackpool and Cleveland also made the list. Interestingly, a detached house in Sunderland was tenth on the list, making Sunderland the best place to buy an investment property across most property types.

There has been a massive increase in both public and private investment into Sunderland in recent years, and it's estimated that by 2024, more than £1.5billion will have been invested in a bid to transform the city centre. The evolving city centre has brought with it many new job opportunities making Sunderland a more desirable place to live. Sunderland has a large student population which is attractive to property investors as student housing is particularly profitable as the property can be rented out on a room-by-room basis.

Blackburn has also received a lot of investment, with the newly renovated Cathedral Quarter central to its transformation. The town now boasts a host of new offices and refurbished college and university campuses. In third place is the riverside city of Durham, which has one of the highest rental values offering up an opportunity for property owners to make £873 per month per house.

The bottom 10 places to invest in a rental property in the UK:

West London
Llandrindod
St Albans
Watford
Hereford
Bromley
Cambridge
Dorchester
Slough
North West London

With property prices being extremely high, it comes as no surprise that West London is the least profitable place to buy a rental property in the UK. With the average house valued at £930,790, it would take an investor 27 years of rental income to pay off their property.

Also at the bottom of the list is Llandrindod, a small town in Wales, recently voted in the top 5 happiest places to live in the UK. Due to this, the property prices are steep, and an investor can expect to only earn a 3.7% return per year based on the average annual rental income of £8,361.

When split by property type, the lowest rate of return across the whole of the UK is for a detached house in St Albans. Investors will only earn a 3.5% return each year, and with the average house valued at £983,979, it's one of the most expensive places to buy a property in the UK.

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