The latest research and data from Zoopla has revealed the top ten hotspots for buy-to-let investors looking for the UK’s highest rental yields.
According to the analysis, demand has increased across the UK, but particularly in southern England, where investor demand had reduced the most over the past five years, following increased Stamp Duty rates and the withdrawal of tax relief for mortgaged investors.
When it comes to yields, Middlesbrough emerges on top of the pile in England. The large North Yorkshire town currently provides investors with a gross annual yield of 7.7%, thanks to the optimum combination of low property prices and steady median monthly rent of £450.
Scotland yields investor benefits
Scotland features heavily in the top ten, occupying five places on the list, with East Ayrshire and North Ayrshire both providing investors with yields of 7.7%, based on a rent of £450, closely followed by Glasgow and Stirling, where yields are recorded at 7.6% and 7.5% respectively.
Strength in the North East, Wales, and Midlands
An ‘investor triangle’ in the North East, with Sunderland District, County Durham and Hartlepool is also generating strong yields for those letting out property. Sunderland ranked in seventh place with a gross annual average yield of 7.4%. This was followed by County Durham, also with a yield of 7.4%, and Hartlepool, which was in ninth place, with an average yield of 7.3%.
Looking regionally, while Scotland and the North East topped the polls with yields of 7.3% and 6.6% overall, Wales ranks in third place with yields of 6%. Close behind is Yorkshire and The Humber with yields of 5.5% and the West Midlands with yields of 5.4%.
Outer London takes the lead
When it comes to London, higher house prices have a knock-on effect on the rental yields that buy-to-let investors can attract. However, there are still areas of the Capital that provide above-average yields when compared to the UK yield average of 5.2%. In first place is the London Borough of Barking and Dagenham, providing a yield to investors of 5.3% and, in joint second place, the Boroughs of Newham and Havering, which both provide average yields of 4.9%.
At the other end of the spectrum, yields were lowest in the City of London at 3.1% - despite average monthly rents of £2,598. This was followed by Kensington and Chelsea, and the City of Westminster.
Tom Parker, Consumer Spokesperson at Zoopla, comments:
“With all of the top ten hotspots being in northern England or Scotland, it’s clear that the significantly lower house prices that characterise these areas and come in well under the national average of £291,055, is playing in a role in the higher yields generated for investors.
“Yields are of course one consideration for investors and, for those considering their first foray into the buy-to-let market, it is worth considering house price growth forecasts for an area, and whether rents are likely to rise over time. With all those factors taken into account, now could be a good time to invest or expand a portfolio, with investors able to benefit from the stamp duty holiday - paying only the 3% levy - until March 2021.”