As a landlord, one of the most important things to consider when choosing a buy-to-let property is location. Different locations command vastly different average rental prices, which means that some prove to be far more profitable than others.
So how can you find the cities whose streets may turn out be paved with gold for lucky landlords? The first thing to do is to look at the average rental yields from cities and towns across the UK – this is calculated by taking the average rental income and measuring it against the cost of the average property. The higher the yield, the more profitable buying to let should prove to be.
Location, Location, Location
When you think of high rental prices, you probably think of London. However, although it has the highest rental prices in the UK, this does not necessarily make it the most profitable locale for buy-to-let landlords. According to a May 2014 study by The Telegraph, there are other areas in Britain with average yields of around three times higher than those in the capital. Â
Looking at the regions with the highest rental yields, certain trends can be identified. Rental prices in London have soared far more dramatically than in any other area of the country, but property prices have seen a similar rise. The increase in the two has been less evenly matched across the rest of the country, which means that other regional centers, ever popular with renters, cost less to buy in and thus deliver greater yields.
The study indicated that these are the top 10 rental hotspots in Britain:
In Southampton, the top ranking buy-to-let hotspot, rental yields averaged a fantastic 8.73 per cent.
Common defining factors shared by each location tend to be these:
Before You BuyÂ
However, before you sink your money unthinkingly into property in one of these regions, bear in mind that location alone will not make the house you choose a successful rental prospect.
Property rental experts HomeLet advise that other factors should also be taken into account. Consider, for example, whether you as an individual feel capable of managing property outside of the immediate vicinity of your own location. If you prefer to be a hands-on landlord, then choosing a property too far afield may not be the wisest idea.
If this is the case, remember that property outside of these locations can still be profitable, provided you do your research. If you can find a property in Leeds, for example, and you calculate that it will deliver a yield of 8.73 per cent, then it poses just as good a rental prospect as a property in Southampton. The true key to success? Doing your research and understanding the criteria that make a rental property profitable.