It is fair to say that the finances of property investors and private landlords have been put under significant amount of pressure recently, but this does not mean that there are not good opportunities still on offer if you find the right spot.
King Of The North
A recent assessment of buy to let properties shows that while London landlords might be struggling, Liverpudlians are seeing good returns, with the Edge Hill, Fairfield and Kensington areas proving to be amongst to most profitable in the UK for buy to let properties. These places are currently offering annual returns of over 12% thanks to lower house prices and huge student property demand. The top three postcodes for buy to let yields are all found in Liverpool with a further three featuring in the rest of the top 25, showing that much of the city is a potential buy to let hotspot.
Liverpool is not the only university stronghold that delivers healthy yields, with Manchester, Nottingham, Sheffield, Glasgow, Cardiff and Plymouth all scoring highly. These cities have shown that they can provide yields of over 7%. Plymouth is one area that has soared recently rising from 15th in the list of top 25 buy to let postcodes to fourth, whilst Middlesbrough also made the top five. Manchester’s figures are also booming thanks to a concentration of four different universities and the recent creation of MediaCity UK in Salford.
Scotland can also boast two of the top 25 spots thanks to areas in Glasgow and Aberdeen both yielding in excess of 7%.
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The South East, however, tells a different story thanks to over-inflated house prices making returns harder to come by. Landlords are finding that such high prices can mean it can take years to recover their costs and starting turning a profit. London is the worst culprit in this, with certain postcodes boasting average property prices of £1.3 million whilst only delivering rent of £2,510 per month. This leaves London landlords with an annual yield of just 2.36%.
Buy To Let Mortgages
Over the last few years, the buy to let market has undergone some significant changes which have hit many landlords hard. A 3% increase in stamp duty, the abolition of mortgage interest relief and increased stress testing have made being a landlord a much harder job. Those who have been hardest hit tend to be found in areas of high house prices where achieving a decent income was hard enough already.
Property prices are continuing to rise, albeit slower than before, which means prospective landlords need a good understanding of what they are getting themselves into. They need to move away from just investing in areas that they know, and instead find out which areas will present them with the highest potential yield.
Once the jewel in the crown of every financial market, the South East is no longer proving to be the goldmine it once was. Instead, investors who do their homework are finding that the best yields are to be found by travelling further north.