Falling house prices in the north has increased yields with Rochdale the best town for buy-to-let landlords.
Data from Zoopla has revealed the best yielding buy-to-let hotspots, all of which are in northern England and Scotland helped by falling house prices.
The town of Rochdale in Greater Manchester is the lucrative place for buy-to-let landlords with yields of 9.0% per annum where a two-bedroom home costs £98,360 and rents of £738 per month.
At the bottom end of yields is St Albans offering 3.65% with an average rental income of £1,209 per month based on average house prices of £397,424.
On a regional basis Scotland has the highest yield of 6.0% per month followed by Yorkshire and Humber and North West England with 5.4%.
Higher yields on cheaper properties
The most expensive property is in Glasgow costing £116,902 for a two-bedroom home with a high yield of 7.96% per annum.
Existing homeowners could consider let-to-buy where the remortgage buyer rents their existing property while buying a new home as their main residence.
Annabel Dixon spokesperson for Zoopla said, despite the challenges facing the sector yields in North England and Scotland match up well against other forms of investment.
The following table from Zoopla shows the top five hotspots for the country with the highest yields with house price and monthly rental income.
| Town House | Price |
Rent |
Yield |
|---|---|---|---|
| Rochdale | £98,360 | £738 | 9.00% |
| Blackpool | £94,509 | £678 | 8.60% |
| Glasgow | £116,902 | £775 | 7.96% |
| Wigan | £101,689 | £601 | 7.09% |
| Middlesbrough | £84,728 | £489 | 6.92% |
Rochdale was top for buy-to-let rental yields with Blackpool offering 8.60% per annum followed by Glasgow with 7.96% and Wigan with 7.09%.
Middlesbrough had the lowest house prices averaging £84,728 and offering gross yields of 6.9% with a low average monthly rent of only £489.
The rise of the rental market has meant that first time buyers have often struggled to afford to buy requiring a higher deposit, larger mortgage or higher earnings get on the property ladder.
With competition and a lack of suitable properties on the market at an affordable price, home movers will remain in their current home and saving for a bigger deposit.
The popular town of Croydon with easy commuter route to London has the second lowest yield of 3.83% due to high property values of £410,391 and rent of £1,309 per month.
Rental yields lower in London
The higher house prices in London results in lower rental yields for buy-to-let investors and the best on offer is for the borough of Barking and Dagenham with 5.34% per annum.
The following table from Zoopla shows the top five hotspots for London with the highest yields with house price and monthly rental income.
| Town House | Price |
Rent |
Yield |
|---|---|---|---|
| Barking & Dagenham | £280,095 | £1,247 | 5.34% |
| Newham | 370,470 | £1,461 | 4.73% |
| Redbridge | £334,873 | £1,287 | 4.61% |
| Westminster | £1,178,964 | £4,522 | 4.60% |
| Havering | £305,629 | £1,169 | 4.59% |
The most expensive properties are in Westminster with an average price of £1,178,964 with rental income of £4,522 per month and yield of 4.60%.
The borough with the lowest returns was Hackney with only 3.3% per annum, despite rent on a two-bedroom home costing an eye-watering £1,933 a month.
Annabel Dixon said, it is no surprise that towns further south provide lower yields.
House price growth has slowed but property is still considerably more expensive in these locations and even with higher rents, the returns are more limited for landlords, says Annabel.
For older homeowners the considerable value in their property allows the equity release buyer to access money using a lifetime mortgage to improve your quality of life or even reduce inheritance tax owed by your beneficiaries.
What are your next steps?
Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the mortgage cost calculators, property value tracker chart and equity release mortgage calculator.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything such as repay an interest only mortgage or help your children start or expand a business.
