According to new research conducted by Move with Us and Home.co.uk, landlords now see the highest buy to let rental yields outside of London.
The new research investigated two bedroom properties which are currently on the market for both sale and rent. The research revealed that lower upfront costs and more reasonable rents are likely to be behind the rise in yields, outside London.
The research revealed the highest returns are outside of London, by a considerable distance:
- Returns in Nechells, Birmingham were up to 10.6%
- New Romney, Greatstone-on-Sea and Littlestone-on-Sea, In Kent, return slightly lower, 10.5%
- Broadgreen, Dovecot, Knotty Ash and Page Moss, in Merseyside, show returns of up to 9.6%
- Cranleigh, Ewhurst and Alfold, in Surrey, will return up to 9.5%
The biggest yields are generally in locations where housing demand is high and in highly populated areas of living, in both cities and towns.
When choosing a buy to let investment, experts suggest investors consider not only the potential rental demand, but also the opportunity to make improvements, which could increase the value of the property. Whilst, also considering the ease of future sale.
London yields falling behind
Boroughs in London continue to see some of the lowest returns. This is mainly because of high house prices, reducing yields, falling demand could also be a factor.
The Olympics has significantly helped yields in the surrounding areas. The investment into East London has helped to push up yields, making them some of the most attractive in the capital:
- Lower Edmonton will return 7.8%
- Plaistow will return 7.5%
- Abbey Wood will return 7.4%
- East Ham will return 7.2%
- Stratford will return 7.2%
Doug Shephard, a Director at Home.co.uk, said: “This new study is a route map for investors in search of the highest potential rental yields. Landlords clearly need to be open-minded about where to invest and not simply look in their immediate area.”
He concluded: “A highly localized approach identifying the ultimate combination of in-demand property types, lower capital investment and higher rental prices will deliver good yields and fewer voids, and maximize potential returns.” (Source: Telegraph)