Some of the most historical cities in the UK, particularly those in Scotland, the north of England and Midlands, are home to the strongest rental yields for landlords.
Property Inspect calculated the number of Grade I and II listed buildings in each UK city and compared it with the average rental yield in that area. The home inspection and property software company discovered a link between history and culture and profitability for landlords.
Out of the 20 UK cities with the most historical buildings, nine featured in the top 10 list of the highest rental yields. This suggests rental desirability and cost is liked with the cultural quality of a city.
Warrick Swift, commercial director of Property Inspect, comments: “The rental market is becoming increasingly challenging for landlords of all sizes thanks to rising house prices but it’s always interesting to examine what else influences the property market.
“Whether consciously or unconsciously, renters are drawn to cultural places and landlords are finding better returns in these areas.”
Regional cities lead the way
In the UK, the average rental yield is 4.12%. This study shows 11 out of the top 20 cities have a rental yield above the nation’s average. And among the top 10, the list is full of cities in Scotland, the north and Midlands.
Glasgow takes the top spot with the highest average rental yield of 7.52%. The city is also home to the third most listed buildings with nearly 4,700. The Northern Powerhouse city, Manchester, has the second-best rental yield for landlords with 5.19% and has 890 listed buildings.
Birmingham, the leading city of the Midlands, follows closely behind with an average yield of 4.92% and more than 1,500 listed buildings. Sheffield and Leeds round out the top five with 4.90% and 4.87% yields respectively.
“The average rental yield has fallen slightly in the last year so results like these give landlords an indication of factors beyond property price that could draw in potential renters and result in more reliable yields over a longer period of time,” Warrick Swift comments.
While London has the most listed buildings with over 19,300, the capital has only a 3.54% average rental yield. This further shows regional historical cities are leading the way.
Focusing on rental yields
As one of the most popular investment methods is to purchase a buy-to-let where landlords earn returns through rental yields over time, focusing on yields and investing for the long term is usually a more effective strategy than only focusing on capital gains.
Rental yields vary widely depending on a number of factors, and location is key. With tax and legislative changes, more landlords are focusing on achieving strong rental yields. Data on average yields can provide landlords an idea of what they could expect to achieve.
Landlords choosing locations with high rental demand and house price growth projections will likely reap the most rewards. And areas with strong transport options and cultural offerings can be particularly appealing for modern tenants. Many cities and towns in the north and Midlands provide lower entry prices paired with strong rental yield and house price projections.
Choosing the right location is the first step to maximising your chances of earning strong rental yields. Browse our area guides to learn more about some of the key investment areas in the UK.