Liverpool, Nottingham and Cardiff are among the latest hotspots for buy-to-let investors looking for the best returns.
The latest edition of Private Finance’s buy-to-let (BTL) hotspots analysis reveals that Nottingham and Liverpool are now the best performing property investment locations with the highest net rental yields at an average of 6.2%.
According to the research, Liverpool has retained its position since the last study in May 2017 despite lower rental yields due to falling rental prices in this area, while Nottingham has moved up from second position thanks to a £121 increase in average monthly rents.
In third position is Cardiff, with average yields of 6%, helping the city rise four places in the top 10 buy-to-let hotspots, again thanks to a notable increase in average monthly rental prices, from £946 to £1,301.
Southampton, up from 11th, and Greater Manchester, up from 5th, also make up the top five buy-to-let hotspots in January 2018, with both destinations offering rental yields of 5.9%.
Overall, rental yields in the top 10 hotspots have increased by an average of 0.9% since May 2017.
Shaun Church, director of Private Finance, said: “Finding the right buy-to-let location is a careful balancing act. Too large an initial investment makes it difficult to achieve a healthy yield, but landlords must also be confident that property values will appreciate at a higher rate than mortgage borrowing to achieve a long-term profit.
“Strong rental demand is also key to prevent lengthy void periods that can damage affordability. While there has been some movement in the top 10 buy-to-let hotspots, larger cities and university towns tend to offer the greatest opportunity for investors as they offer the highest rental demand.”