Seaside towns heads chart for highest rental yields for landlords

Landlord Expert
By Landlord Expert May 7, 2013 07:27



Port cities and seaside towns head up the table of the most lucrative places to buy property to rent out, according to latest research.

Landlords with houses in Southampton, Blackpool and Kingston-upon-Hull are all achieving typical rental yields of almost 8% on their buy-to-let properties, according to HSBC – the highest in the country. Manchester, Nottingham and Coventry are not far behind.

"Buy to let remains a good investment for those looking for above-average returns. Twenty-three of the top 50 areas offer yields above 5%, significantly more than is available from more traditional savings options," said Peter Dockar, head of mortgages at HSBC. "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."

This looks to be the case in London – the capital did not make it into the top 10 best places for buy-to-let. Due to its high property prices, rental yields are "relatively modest", according to HSBC.

The best returns come from the borough of Southwark, home to the Shard, Southwark cathedral and foodie favourite Borough market. The average property price there is £401,405 and the average rent £2,058, giving a rental yield of just over 6%. In well-heeled Kensington and Chelsea, where the average property price is just over £1m, rental yields are the lowest for the capital at just over 3%.


While landlords in London may not feel like they are reaping the rewards of their investments, their tenants are suffering from record high rents as an increased demand for rental property pushes up prices.

Rents in the capital have hit a new high of a typical £1,106 a month, according to LSL Property Services, which owns national lettings agency chains Your Move and Reeds Rains. The capital has experienced the fastest annual rent increases in the country, making the average property £81 more expensive than a year ago.

"Rents in London are red-hot," said David Newnes, director of LSL. "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."




Landlord Expert
By Landlord Expert May 7, 2013 07:27

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