Nottingham, Liverpool, Manchester, Leeds and the North East topped the latest index
The best rental returns in the UK can be found in regional cities with a high density of students, according to new figures.
Published by TotallyMoney, the Buy-to-Let Rental Yield Map 2018/19 found that populous city regions with strong student demand and extensive transport links were the areas of the UK most likely to offer high rental returns for buy-to-let investors.
Generating an average rental yield of 11.99%, the NG1 postcode in Nottingham offered landlords the highest rental return of anywhere in the country, with the average property price for the area standing at £152,631.
This was followed by Liverpool’s L7 postcode, which averaged a 9.79% return, and the TS1 postcode in the Cleveland area of Middlesbrough, where returns reached 9.45%.
Overall, the top 25 postcodes in the UK were dominated by the UK’s regional student cities, with six Liverpool locations featuring on the list and multiple appearances for Nottingham, Manchester, Sheffield, and Middlesbrough.
Postcodes in Leeds, Sunderland and Aberdeen also featured in the leading locations for landlords and investors.
The worst performing location for rental returns was found in the CW12 postcode of Crewe, where returns were as little as 1.88% on average, despite a mean property price of £370,677.
Hemel Hempstead’s HP9 postcode and London’s N6 were the next lowest performing areas, with average rental returns of 1.91% and 1.93% respectively.
Each of the locations featured in the bottom 25 postcodes had an average property value that exceeded the April 2018 national average house price of £226,906, said the report.
Commenting on the findings, Head of Brand & Communications for TotallyMoney, Mark Moloney, said:
‘Year after year, there’s a constant flux of students looking for somewhere to bed down for the night, so it’s no surprise that university cities offer landlords the highest buy-to-let yields. Demand is high, and landlords may use this as an opportunity to drum up competition between tenants and push rental yields higher.
‘Landlords need to go into property investment well-armed: they need to be on top of their credit rating, compare the best buy-to-let mortgage rates, and focus on property investment in areas that can give them the highest yield.’
Last week, the latest rental tracker index from Your Move found that landlords with properties in regional areas saw the best returns in October, as the average rent in England & Wales increased by 2.2%.