Posts with tag: rental yields

Where Landlords can Achieve the Highest Rental Yields in the UK

Published On: April 13, 2017 at 9:44 am


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Some buy-to-let landlords are preparing themselves for dwindling profits over the next few years, as a result of the Government’s mortgage interest tax relief changes. But solid returns are still achievable, if you look to the locations with the highest rental yields in the UK…

Peer-to-peer lender Kuflink has assessed the average rental yield in 50 major towns and cities across the UK, finding that properties in Salford in the North West of England typically offer the highest rental yields in the UK, at an average of 7.08% in the first quarter (Q1) of the year.

Where Landlords can Achieve the Highest Rental Yields in the UK

Where Landlords can Achieve the Highest Rental Yields in the UK

This was followed by Leeds, Manchester and Coventry.

Unsurprisingly, London is among the bottom locations, given the high cost of buying property in the region. Average returns in the capital are just 3.45%. But it is Chelmsford in Essex that provides the weakest yields, at an average of just 2.89%.

Overall, rental yields in Q1 2017 remained broadly stable across the UK, with the gap between returns in the north and south closing.

The CEO of Kuflink, Tarlochan Garcha, says: “This index shows that savvy investors should look to the regions where strong rents and more affordable house prices make for fruitful investment opportunities. The Northern Powerhouse is leading the way, while London falls by the wayside, as rents fail to keep up with rocketing house prices.

“The stability of both house prices and rents is a positive sign for buy-to-let investors, proving the strength of the UK’s property market, which is able to withstand the uncertainty surrounding the UK’s exit from the EU.”

He adds: “The following few months will be the true test of the market, as Article 50 negotiations get underway.”

Are you looking for the highest rental yields in the UK? Here are the locations you should invest in:

  1. Salford, North West – 7.08%
  2. Leeds, Yorkshire – 5.96%
  3. Manchester, North West – 5.79%
  4. Coventry, West Midlands – 5.64%
  5. Belfast, Northern Ireland – 5.46%
  6. Portsmouth, South East – 4.92%
  7. Birmingham, West Midlands – 4.90%
  8. Edinburgh, Scotland – 4.88%
  9. Durham, North East – 4.85%
  10. Fife, Scotland – 4.54%

The following towns and cities provide the lowest average rental yields:

  1. Chelmsford, East of England – 2.89%
  2. Cambridge, South East – 3.17%
  3. York, Yorkshire and the Humber – 3.17%
  4. Chester, North West – 3.28%
  5. Doncaster, Yorkshire and the Humber – 3.38%
  6. Derby, East Midlands – 3.41%
  7. Wigan, North West – 3.44%
  8. Wolverhampton, West Midlands – 3.44%
  9. London – 3.45%
  10. Carlisle, North West – 3.47%

HMOs in the North West outperforming standard buy-to-lets

Published On: April 11, 2017 at 10:09 am


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The most recent report from The Mistoria Group has revealed that HMOs are substantially outperforming more standard buy-to-let investments for both yields and returns in the North West.

Analysis shows that the average gross cash return before any charges or voids on HMOs with student or young professional tenants have risen to 12-15% over the last five years. This is in comparison to an average gross return of between 6-8% on a standard buy-to-let in the North West.

Greater Returns

HMO investors have seen a substantially higher return than standard buy-to-let investors during the last five years, with 13% in comparison to 7%. This comes despite the fact that the initial capital investment in a HMO is greater than for standard buy-to-let.

Mish Liyanage, Managing Director of The Mistoria Group, observed: ‘If investors buy HMOs in the right location, right market and from the right agent in the North West, they will achieve much higher yields than a standard buy-to-let in the Midlands or South East. Hence, HMOs provide a secure and an excellent performing passive investment to supplement your monthly income.’[1]

‘HMOs in Liverpool and Salford have become very popular with investors, as both cities have a high population of students and young professionals.  Also in both Salford and Liverpool, Article 4 is not in operation, so investors can convert a family home, or a home used by a single person (C3 -dwelling house/flat) to a small-shared house of up to six unrelated individuals (C4 –HMO), without any planning permission,’ he continued.[1]

HMOs in the North West outperforming standard buy-to-lets

HMOs in the North West outperforming standard buy-to-lets


Liyanage went on to note that each investor must show caution when choosing their purchase location:

‘Every investor needs to be cautious and ensure they buy in the right street, as yields can vary dramatically by postcode.  HMOs within walking distance of a University, or just a short bus or train journey away, will usually command the highest rents.’

‘Whilst the market conditions in many areas are becoming more developed and competitive, a HMO property with a superior spec can deliver landlords and investors an average gross rental yield of 13%, leveraged return on investment of 35% plus, before any charges and voids.’

‘For example, investors can acquire a high quality, three bed HMO which houses three students, from £120,000 upwards in Liverpool.  The return on investment is very attractive too, with 13% (8% cash rental and 5% capital growth). The gross rent on the property will exceed £1,235 pcm, as each room is rented out. Larger rooms, open plan living and kitchen areas, ensuites, TVs, unlimited broadband, premium kitchen appliances and furnishings are the type of features that help to generate a high yielding HMO.’[1]



Northern University Cities Dominate Best Investment Hotspots

Published On: April 4, 2017 at 8:13 am


Categories: Landlord News

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Northern university cities dominate the list of the best buy-to-let investment hotspots in the UK, according to recent figures.

Research found that half of the top 20 best buy-to-let investment hotspots are in northern university cities. Manchester – home to the University of Manchester and Manchester Metropolitan University – offers buy-to-let landlords a potential average rental yield of 6.73% – the best in the UK.

In addition, Salford – in the metropolitan borough of Greater Manchester – offers investors a very respectable student property yield of 6.68%.

Northern University Cities Dominate Best Investment Hotspots

Northern University Cities Dominate Best Investment Hotspots

Portsmouth – home to the University of Portsmouth – came in third place, with an average yield of 5.75%. Meanwhile, Leeds, Cardiff and Coventry were close behind, with average returns of 5.67%, 5.59% and 5.59% respectively.

Plenty of UK cities saw growth in average yield, with Hull – where the University of Hull is based – experiencing the greatest average yield increase of 0.31%, closely followed by Luton – home to the University of Bedfordshire – with a rise of 0.31%, and Rotherham, at 0.28%.

The study also found that cities hosting the very best UK universities were not necessarily the best locations for buy-to-let investors.

Despite being home to the fourth best university in the world and boasting alumni such as Charles Darwin, Isaac Newton and Stephen Hawking, Cambridge actually has the worst average rental yield, at 2.7%.

Oxford – host to the current number one university in the world – also followed this trend, with an average return of 3.9%.

Chester was found to be the second worst investment hotspot for landlords. Home to the University of Chester, the city recorded an average rental yield of just 3.04%.

Chelmsford, home to Anglia Ruskin University, followed closely behind, at 3.07%, with Wolverhampton and Carlisle not far off – 3.27% and 3.29% respectively.

Even London – home to King’s College London, the London School of Economics and the University of London – recorded an average rental yield of just 3.25%, ranking the fourth worst in the UK.

It seems that the best investments really are found in northern university cities!

Danielle Cullen, the Managing Director of, comments on the findings: “For anyone looking into investing into student property, it’s important to assess the potential yields in the area. It’s really interesting to see that the cities that contain the best universities actually offer the worst yields, and just a little bit of research will uncover this for potential investors.

“Yield is a bit of a buzzword for investors, but often, a lot of people don’t actually know how to work them out, or how valuable knowing that information is. I would strongly advise spending a bit of time learning about the importance and how you can optimise them to ensure you get the best possible return on investment.”

She continues: “I would also express though that yields aren’t everything you need to know. There are a lot of other factors a landlord should consider before investing, such as proposed vacancy rates. For example, if the property will be vacant over the summer in a student let. Or, if it’s more attractive for a certain type of tenancy, such as short-term lets where there is likely to be a higher rate of vacancy, but perhaps the potential of higher rents.”

High Yield and Capital Gain – A Landlord’s Dream

Published On: April 3, 2017 at 8:17 am


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By Karl Griggs, Director, CPC Finance

High Yield and Capital Gain - A Landlord's Dream

High Yield and Capital Gain – A Landlord’s Dream

With April 2016’s changes to Stamp Duty for buy-to-let properties and April 2017’s changes to mortgage tax relief, landlords are facing additional challenges to obtaining maximum profitability from their investments. One of the most important steps for a landlord (apart from deciding if purchasing in personal name or limited company) before deciding upon the right property for the next investment is to gain an understanding of what they want from it financially: Is the main purpose to achieve higher yields and cash flow, or achieve the highest capital appreciation and return on investment throughout the time the property is owned? Of course, ultimately landlords are looking for both, but properties will differ in how they deliver one or the other.

Much has been written about the potential to achieve higher rental yields outside of London and the South East, especially certain hotspots in cities including Manchester, Southampton and Newcastle, to name a few, where property prices are lower. Gross rental yields of 7% can be achieved in these cities – with yields up to 10% in certain neighbourhoods – compared with 2-5% in many areas of the capital. Given the potential to achieve such high yields, should investors drill down to find these locations to purchase their next property?

The answer: it depends. For investors looking for short-term cash flow and higher rental yields, investing in these higher-yield areas outside of prime city centre locations will provide the best option. But those investors wanting to achieve the highest overall return over a longer-term period of, say, 15 years, would do well to look for a geographic area or neighbourhood that will provide both increasing rents and the potential for capital appreciation. This will ensure that the rental yield remains stable over time.

One strategy is to carefully consider which locations are good candidates for gentrification. Properties in such areas, which are attracting investment from the local council and local residents, new planned rail links, or seeing an influx of new businesses, might command a higher purchase price, and hence provide a slightly lower initial yield. But these neighbourhoods, which are scattered in most cities across the country, could provide a better opportunity for a combination of both capital appreciation and rental growth.

Investors should not discount the potential for capital appreciation when buying their next rental property. Combined with a strong rental yield, a hybrid strategy could provide the best opportunity to achieve the highest overall return on an investment. Conversely, purchasing an investment property solely to achieve long-term capital appreciation could backfire, especially if property prices stagnate. Sacrificing a lower yield in hopes of a larger gain over the long-term could end up costing more. Remember to account for Capital Gains Tax at the point of sale for any buy-to-let property – and make this a key consideration before purchasing.

Given the increased scrutiny of the buy-to-let market, due diligence will be required by those investors who are looking to achieve the best long-term return on their investment. Spending time to drill down into specific neighbourhoods to identify the best potential for high yields or gentrification will likely provide the best opportunity for potential investors to profit from their investment. As the saying goes, it is all about location, location, location.

Southeast London set for Transport Boost, Creating Investment Hotspots

Published On: March 28, 2017 at 10:11 am


Categories: Landlord News

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If you’re planning a future property investment, it pays to know about upcoming transport plans and improvements. Those considering the capital should look to southeast London, where a transport boost is planned.

So where are the key investment hotspots in southeast London?

£220m investment in Beckenham, South Norwood and Lewisham 

The Mayor of London, Sadiq Khan, is handing out a huge £220m for local transport and regeneration improvements in southeast London.

Southeast London set for Transport Boost, Creating Investment Hotspots

Southeast London set for Transport Boost, Creating Investment Hotspots

Several major projects have been outlined to begin in 2017/18, including a £1m refurbishment of Beckenham town centre, creating greener and safer cycle paths in South Norwood, plus improving the junction of Sangley and Sandhurst Road in Lewisham.

The Sales Manager of Portico London estate agent, Tony Chryseliou, comments: “The Mayor’s plans will certainly improve southeast London’s desirability as an up-and-coming place to live.

“We’ve seen house prices in central London reach an inconceivable peak in the last few years, causing many people to reassess just how centrally they need to live. Subsequently, areas like Beckenham and Lewisham are starting to appeal to a much wider range of buyers – and there’s still room here for price growth too.”

This pocket of southeast London is an attractive buy-to-let hotspot too, with investors still keen to secure property investments in the area, despite higher Stamp Duty and forthcoming tax changes.

Landlords can find a strong 4% yield in Beckenham, with certain areas even higher, such as Wickham Road at 4.3%.

And yields are even higher in Lewisham, where landlords can secure a 4.5% yield in the area around Lewisham and Ladywell Station, and a 4.8% yield in the Deals Gateway area around Deptford Bridge Station.

In comparison, landlords looking to invest in central London can expect much lower yields of around 3%.

Extending the Bakerloo Line

Southeast London’s popularity is already on the rise, and Transport for London is now proposing an extension of the Bakerloo Line beyond Elephant and Castle to Lewisham, serving Old Kent Road and New Cross Gate.

The new route would include four new stations – two on the Old Kent Road, another at Lewisham, and one more at a key interchange at New Cross Gate.

If the scheme is given the go-ahead and funding is secured, construction could start in 2023, with services aiming to be running by 2028/29 – so there’s a fantastic long-term opportunity for investors here.

Will you be looking to southeast London for your next investment?

Wales sees largest rental growth in the UK

Published On: March 27, 2017 at 10:19 am


Categories: Landlord News

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Rents throughout England and Wales increased in all bar two of the eight regions analysed by the latest Your Move England & Wales Buy to Let Index during February

This was led by increases in Wales, where rents grew by an average of 7.7% year-on-year to February to hit £593 per month. Despite this, Wales remains one of the cheapest places to rent.

Rental Costs

The North East and Yorkshire and the Humber were found to be the only regions in the report with cheaper rents than Wales, with average rents of £545pcm and £566pcm respectively.

In terms of rental growth, the East and South East of England led the way, with rents in these regions rising by 5.6% and 3.4%. Average rents in the East of England currently stand at £868 per month, while in the South, this figure rises slightly to £878pcm.

Valerie Bannister, Letting Director at Your Move, said: ‘Areas in the South East and East of England have traditionally offered much better value than the capital and this has tempted many Londoners to look further afield for rental properties.’[1]

Capital Pains

In London, rents continued to fall, with the city the only region surveyed to see rents slide both month-on-month and year-on-year.

The average rental property in London was let for £1,280pcm in February 2017-1% lower than at the same period one year ago.

Continuing, Bannister noted: ‘The dramatic rent increases in London have now slowed as people look outside the capital in order to meet their housing aspirations. Renters in London could be reaching the limits of their affordability as prices dropped back 1% in the last year. This will be one to watch as the year progresses.’[1]

Wales sees largest rental growth in the UK

Wales sees largest rental growth in the UK


London was not the only region to see rents slip year-on-year. In the South West prices fell by 1.5% in the last 12 months to reach £662pcm.

Taking England and Wales as a whole, the average rent stood at £798 in February. This was the same as in January, but was down from the £811 seen at the end of 2016.

In terms of yields, the report found that the average was 4.1% in February. This is down on the 4.9% seen at the same period last year.

Unsurprisingly, places with higher house prices command the smallest yields. It is not a surprise then to see that the average yield in London was only 3.2%, lower than in any other part of the country.

On the other hand, properties in the North East saw the largest yields, returning an average of 5.3% in the last month.