At the end of 2016, towns in England’s North and Scotland saw the biggest increase in rental yields, hitting up to 4.3% whilst London averaged out at 3.2%.
Properties across Manchester and Salford saw average yields of 6.7% and 6.6%, while Cambridge only climbed up to 2.7%, the latest buy-to-let index revealed.
To get the data, peer to peer lending platform Kuflink analysed the average house price and rent in 50 of the country’s major towns and then figured out the average rental yield for every single location.
Manchester came out as Number One with an average rental yield of exactly 6.73% and was closely followed by neighbouring Salford at 6.68%.
Other areas in the North followed the same trend as the two bigger cities, which led the North overall to show the biggest rental yield growth in the UK.
The cities in the North significantly outperformed London. Although rental costs are extremely high in the capital, house prices have seen a constant increase too and sat at an average of £680,000 in December 2016. This leaves London’s buy-to-let landlords with rather unimpressive returns.
The research also revealed that there are now less than 41,000 properties available in the Uk for £250,000 or less. This is a drop from 58,000 (-29%) since October. Narrowing this down even more, there are now fewer than 2,000 properties for under £250,000 available in London.
“Buy to let properties in the North can be a steady investment, attracting renters who cannot afford to step onto the property ladder and therefore choose to rent in good locations, which are well-suited to their lifestyle,” said Tarlochan Garcha, chief executive officer of Kuflink.
“Manchester and Leeds are both bustling cities, popular with young professionals and families, and can offer solid returns for landlords. While Birmingham, which has a growing business district and is soon to benefit from HS2, cutting journey time to London to just 49 minutes, is also firmly on the map as a strong buy to let spot. It could be time for landlords to turn their attention away from pricey London and look to the UK’s regional cities.”