When it comes to property yields, it’s not so grey up North...
Pockets of the North West have boomed in recent years – and for good reason. If we take a look at the data we can see Kirkwall, Motherwell, Paisley, and Falkirk (all in Scotland) offer the highest rental yields of anywhere in the UK. The combination of low property prices and a steady monthly rent means these areas offer a great investment option for landlords. If you’re looking for incredibly high yields – some of which sit at over 10%, then these parts of Scotland are a great option.
The North East offers great buy-to-let opportunities
North East England is the next most dominant area for investors. Newcastle offers some fantastic buy-to-let yields - averaging around 7.08%. A cluster of similar university cities up in the North East generate similarly high buy-to-let yields, with Middlesbrough generating a yield of 6.23% and Sunderland offering 6.74%.
“We can see a clear trend with high yields across the UK. All of the top hotspots are in Northern England or Scotland. The significantly lower house prices in these areas certainly play a role in the higher yields generated for investors. If this is your goal and you’re looking for properties with good yields to help build your future deposits up, then these regions are golden.” says Sharon Donaldson, Managing Director at Countrywide.
Where else offers high yields for investors?
As you can see from the graph below, asking prices over the last year have sky-rocketed. This just further demonstrates the capital growth still available in the purchase of property and the long-term returns that can be expected.
Liverpool and Sunderland swoop in next, with a yield of 6.98% and 6.74%. Liverpool currently has an average asking price of around £90,000. One of the big reasons it’s such a great place to invest is because it has a thriving student community, and a constant stream of diverse, high net-worth industries based in the city. Young professionals are a key rental demographic here. Predictions estimate that the North West region, in general, will see house prices rise by 24% through to 2024, so it’s a great place to invest.
The next city on the list is currently generating a yield of 6.09%
Manchester is next; one of the UK's most exciting cities and it’s constantly in demand. It has a growing population of 2.7 million people who need affordable places to live as well as a thriving business scene, aided by establishments like the BBC and MediaCityUK. The yield here is 6.09% and there are so many areas to invest where you’ll receive both good yields and also capital growth. In fact, the average value of residential property in Manchester is set to grow by 17.1% by 2024.
Where are the UK’s worst areas for buy-to-let yields?
Unsurprisingly, higher house prices have a knock-on effect on rental yields. The top 5 worst postcodes for rental yields are NW, SW, W, WC, and EC - all of which sit in London. The City of London actually offers a 3.43% rental yield despite having incredibly high monthly rents. It’s worth remembering that house prices have risen by £380,200 since 2011 and £739,800 since 2001. So if you’re looking for areas of capital growth, the City of London is quite a safe bet.
You can learn more about where property prices have increased this year in our latest blog post. We recommend that you do your own research before committing to any investment.