A new study has shown that the regions continue to grow in prominence as places to invest in rental property in the UK, with the returns that can be found in northern cities in particular likely to outpace those in evidence across more traditional areas of the country.
According to the study released by property lender Kuflink, over the course of the last year, a period in which the UK’s rental market has faced difficulties, what with the changes to policy and the fact that politics has been a minefield, things have generally gone well.
Landlords have faced both uncertainty and negative changes to their operations, thanks to the fact the government has made the market a more expensive place to operate. However, Kuflink said that this has not had much of a negative impact on the market in general.
Overall in the past year, it said that in 50 regional locations nationwide, there has been a steadying of rental yields experienced by investors, showing that the market has the potential for growth, and the resilience to last through difficult times.
According to the findings, it is the so-called Northern Powerhouse that continues to see the best yields in the market, therefore leaving the region as one of the very best places to invest in rental properties at present.
The Northern Powerhouse has been growing in prominence in recent years, largely thanks to the swell of companies either starting up in or moving to cities in the north, and away from London. This has meant staff also deserting the capital, making a new demand for properties in the rental market in the north of England.
Kuflink said that in the last year, rental yields have been best nationwide in Salford, Leeds and Manchester, where they have sat at 7.08 per cent, 5.96 per cent and 5.74 per cent respectively. It’s no surprise that these areas are becoming the best to invest in property. Over the last few years, jobs numbers and commercial property construction in each has swelled, meaning there’s been a need for new skilled workers to come to each. This, in turn, has led to a new demand for suitable properties.
Away from the north of England, other regional areas of the UK have also been performing well in terms of rental yields, and remain strong options for those who want to invest in rental properties. Coventry, Belfast, Portsmouth, Birmingham, Edinburgh, Durham and Fife, in Scotland, have all seen strong performance for owners in the last year, with yields remaining above 4.5 per cent in each.
On the flipside, areas such as Cambridge, York, Chester, Doncaster, Derby, Wigan, Wolverhampton, London and Carlisle have been performing poorly for investors in recent times. Each of these, including the capital, has seen rental yields of less than 3.5 per cent in the past 12 months.
“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,” said Tarlochan Garcha, Kuflink chief executive officer. He said that lower average house prices and higher rental prices in the north make such areas extremely favourable for investors over traditional investment hotbeds.