Southampton, Blackpool and Kingston upon Hull have topped the charts as the UK’s top buy-to-let spots, according to research from HSBC.
The figures showed that the average cost of a Southampton property comes out at £138,311, with average monthly rents at £901, providing an impressive rental yield of 7.82pc. The latest research shows that investors may be wise to invest north of London, with Manchester, Nottingham and Coventry coming closely behind with yields of over 7pc.
HSBC looked at 50 UK towns and cities, comparing property prices, average rents and concentration of rental properties. Areas with a combination of low property prices as well as a strong rental market came out on top. It seems no coincidence major university cities such as Manchester are ranking well, with growing numbers of students and an excessive demand for accommodation.
Peter Dockar, the head of mortgages at HSBC, pointed to the fact that buy-to-let still remains a valuable investment:
“Buy to let remains a good investment for those looking for above average returns. Twenty-three of the top 50 areas offer yields above 5pc, significantly more than is available from more traditional savings options."
He added: "However, it is clear there is a fine line between a property in a desirable area, the rents that can be achieved and the returns that can be yielded."
High property prices meant that the Capital did not make it into HSBC’s top ten. According to LSL Property Services, average London rental prices are £1,106 a month, and show the largest annual raise in the country.
David Newnes, director of LSL, referred to London rents as “red hot”.
He said:"In spite of the unseasonal weather the rental market has gained some ground. Over the next few months it looks likely the spring bounce will continue."
So whilst many investors may stick to what they know with buy-to-let investments in the Capital, others may be lured towards new hotspots with impressive rental yields.
Jonathan Harris, director of Anderson Harris, said: "Wealthy investors who are well acquainted with the top end of the market may well stick to those well-established locations when buying further rental property.”
He added: "But there are also plenty of less wealthy investors, the mass-affluent, who are more likely to be driven by yield into unusual places. Many are moving into property because cash and stocks and shares are producing either poor or unacceptably volatile returns."
Written By Sarah Davis