18th
Jun 2017
Liverpool landlord's are now enjoying rental yields of around 8% after taking mortgage costs account, which makes the city UK's number one buy-to-let hot spot.
New research, from an independent mortgage broker, claims that Liverpool landlords are achieving the best rental yields across the UK with an average monthly rent of £1,021 and the low average house price of £122,283.
Runners up are Nottingham with a rental yield of 5.6%, Coventry is next at 5.4%, Greater Manchester at 4.3% and Portsmouth at 4.2%, according to the research.
Only three of the Top Ten hotspots feature southern towns, Bournemouth, Portsmouth and Southampton and being on the coast attract lucrative holiday rental periods as well their student populations.
The mortgage broker's findings indicate that mortgage costs along with property prices is more important to BTL investors when studying an area to purchase a property, as these are the main contributory factors in achieving best rental yields.
The research included calculating the rental yields for 50 UK cities and town that had the highest numbers of rented 'homes'. Six out of the ten areas with the lowest house prices are included in the Top Ten list for highest rental yield.
Those locations that 'boast' the highest average rents do not make it into the list and are predominantly in the city where £5,000 monthly rentals are achievable, however property prices are ridiculously high.
Shaun Church, director of the mortgage broker, said: “It’s not only the residential property market that’s all about location, location, location. Many landlords will treat property as a long-term investment, looking for reward in the form of capital gain.
“Succeeding in making a long-term profit depends on buying an affordable property and being confident its value will appreciate at a higher rate than mortgage borrowing. However, for more immediate returns, landlords can optimise rental yields by choosing their buy-to-let location carefully.”
He advocates that investors should always seek out areas that have a high rental demand, especially university towns and cities which have always had better performing rental markets with less void periods.
He continued : “Investors may also want to stay away from areas with very high house prices. Although these locations can provide high rental income, a large initial investment can prevent investors from achieving good returns.
“When purchasing with a mortgage, landlords should keep in mind that the larger the loan, the higher their mortgage costs will be. Now that tax relief on mortgage interest is being restricted, keeping mortgage costs down is particularly important.
“The good news is all landlords are benefitting from ultra-low mortgage rates. An independent mortgage broker has access to products that might not be available if going it alone, and can help track down the most affordable and suitable option.”
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