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Insight & Opinion

HSBC UK buy-to-let hotspots revealed

Author: Gemma

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Annual report from HSBC highlights the UK’s top buy-to-let hotspots

HSBC’s latest top 50 UK buy-to-let hotspots have been revealed.

The high street bank has compiled a list of the UK’s best performing location in terms of yield.

The annual report shows that Manchester, Kingston upon Hull and Blackpool are currently the best places for investment. This is due to lower property prices and strong local rental markets.

Location % of housing stock privately rented Average house price Average annual rent Rental yield 
Manchester 26.85% £108,870 £8,628 7.98% 
Kingston upon Hull 19.02% £69,135 £5,400 7.81% 
Blackpool 24.16% £79,654 £5,856 7.35% 
Forest Heath 21.80% £171,322 £12,432 7.26% 
Coventry 19.02% £116,946 £8,424 7.20% 
Southampton23.42% £151,415 £10,800 7.13% 
Nottingham 21.64% £89,312 £6,288 7.04% 
Liverpool 21.75% £90,426 £5,928 6.56% 
Cardiff 20.32% £150,892 £9,624 6.38% 
Portsmouth 22.28% £155,696 £9,900 6.36% 

Despite being named buy-to-let hotspots, investors may only achieve a rental yield of around the 8% mark.

Capital appreciation has not been factored into this report as any growth in the market cannot be relied upon.

Opportunities such as student property or healthcare property may provide investors stronger NET returns.

Peter Dockar, head of mortgages at HSBC, says: ‘Landlords are reaping the benefit as young professionals say goodbye to capital living in favour of affordable commuter towns.

‘House prices in these locations — which are still out of reach for first-time buyers — are relatively affordable for landlords investing in property. The demand from young professionals has pushed up rents and driven up the returns.’

Investors looking to purchase buy-to-let property should consider their outgoings before investing. Factors such as interest, management fees, maintenance and the day-to-day running costs of the property should be considered when working out returns.

Void periods should also be considered by buy-to-let landlords to ensure that any mortgage repayments can be made if the property is empty.

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