Revealed: Britain’s top 10 buy-to-let hotspots

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.” 

  • Andrew McCausland

    This chimes with my own experience of dealing in the north west. However, within the Liverpool City region there are marked differences, even down to sub-postcode areas

    Liverpool city centre in L1, L3 and L69 areas has an increasing supply of new build 1 and 2 bed apartments. Whilst prices are stable rents will come under pressure as supply becomes oversupply in the near future, despite the growing number of young professionals in the area. Further afield parts of Norris Green and Kirkdale (amongst others) are still no-go areas. Whilst they offer fantastic yields it would take a brave man to invest there, in my opinion.

    For those wanting low price purchase prices and decent returns then L20 (Bootle) is well worth a look. My personal recommendation would be to stay away from the very small houses in high density areas north of Bootle Strand and concentrate in the area south of the Strand and closer to Liverpool centre.

    We still see Birkenhead and the Wirral in general offering the best yields and capital growth prospects. The peninsula benefits from the ripple effect of all the major works in Liverpool city, but prices are still some 15-20% cheaper than across the Mersey whilst rents are slightly higher. The Wirral has been overlooked by many investors, but the tide is changing and the clever money has been going there in the past 18 months.


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