Research shows best locations in the UK for buy to let property investment
Property investment in the UK remains solid despite Brexit with regions with strong rents and more affordable prices offering the bet yields for landlords, new research suggests.
Overall rental yields across the nation have remained strong as house prices have been resilient to the decision to leave the European Union and rents have been stable, according to the latest buy to let index from peer to peer property lender Kuflink.
The firm’s analysis of average house prices and median rents in 50 major towns and cities across the UK show that since January 2017, average rental yields have remained strong, despite a dip in rents across the UK, in 34 out of the 50 locations.
House price growth has slowed, but prices remain fundamentally strong and Swansea saw the biggest increase in average property prices at £5,593, followed by Milton Keynes with an increase of £4,689. Although the South of England continues to see stronger house price growth than the North, the gap between the north and south is shortening, the research report points out.
It is cities and towns in what is known as the Northern Powerhouse that are proving to be the current best for investment in buy to let property, the report suggests with yields of 7.08% in Salford, 5.96% in Leeds and 5.79% in Manchester.
Coventry, Belfast, Portsmouth, Birmingham, Edinburgh, Durham and Fife in Scotland also show good yields of 5.64%, 5.46%, 4.92%, 4.9%, 4.88%, 4.85% and 4.54% respectively.
Chelmsford in Essex provides the weakest returns of just 2.89% with Cambridge, York, Chester, Doncaster, Derby, Wigan, Wolverhampton, London and Carlisle also at the bottom with average yields of 3.17%, 3.17%, 3.28%, 3.38%, 3.41%, 3.44%, 3.44%, 3.45% and 3.47% respectively.
In London the top yields can be found in the borough of Barking and Dagenham at 5.3%, followed by Newham at 5.19%, City of London 4.58%, Westminster 4.31%, Havering 4.28%, Tower Hamlets 4.12%, Merton and Hackney both 4.1%, Greenwich 3.93%, and Southwark 3.82%.
The borough with the poorest yields in London is Kensington and Chelsea at 2.8%, followed by Hammersmith and Fulham at 2.9%, Bromley at 2.96%, Haringey at 3.01%, Richmond upon Thames at 3.02%, Islington 3.15%, Harrow 3.26%, Bexley 3.37%, Croydon 3.43% and Redbridge 3.49%.
According to Tarlochan Garcha, Kuflink chief executive officer, the research suggest that 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,’ he pointed out.