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Revealed: the safest BTL investment areas based on crime levels and rental yields

Rental yields tend to increase in areas with higher crime rates, according to new research.

The study by the national lettings platform, Howsy, looked at how crime rates impact rental yields and found that the average return actually increases as the level of crime does. 

Howsy looked at government data on population figures by local authority, the level of crime in these areas, the average house price, rental costs, and the resulting rental yields to see how crime and buy-to-let profitability correlates.

In the lowest threshold between 0 and 40 crimes per thousand people where there is an average of 34 crimes per thousand of the population, the average rental yield sits at 3.58%.

Between the threshold of 60-80 crimes per thousand people, this increases to 3.77% and in the highest category of 100 or more crimes per thousand people with an average of 123 crimes committed per thousand people, rental yields are at their highest – at an average of 4.38%.

The research also looked at where in the UK offers the best buy-to-let investment, with the highest return and the lowest propensity for crime. 

In the lowest crime category of 0-40, Merthyr Tydfil is home to the highest yields. With an average house price of £102,713 and an average monthly rent of £472, landlords can expect yields of 5.52% with the lowest chance of crime impacting their investment.

Staying in Wales, Rhondda Cynon Taff is the second safest investment with yields of 4.50%. North East Derbyshire ranks third (3.84%), followed by North Kesteven (3.75%), West Oxfordshire (3.67%), Wealden (3.64%), East Cambridgeshire (3.60%), Rutland (3.52%), Broadland (3.32%) and South Norfolk (3.30%).

Calum Brannan, founder and CEO of Howsy, said: “Financial gain is understandably the driving factor in any buy-to-let investment but money isn’t everything and there have been numerous horror stories of rental properties being misused and mistreated for criminal gain or just flat out burgled causing a great deal of damage in the process. 

“This is a nightmare scenario for a buy-to-let landlord and as many don’t live close to their property, it means a lot of time and money spent to rectify the situation. This all eats into the profitability of your investment and can even result in a landlord selling up and exiting the sector altogether.

“So when looking to invest, it’s smart to consider the additional factors that can impact your property and not just the top line return.”

Categories - crime rate vs average rental yield

Crime rate category (per thousand)

Average crime rate (per thousand)

Average Rental Yield %

0-40

34.02

3.58%

40-60

52.05

3.55%

60-80

68.91

3.77%

80-100

89.20

4.20%

100+

123.20

4.38%

All categories

76.39

3.91%

Ranking - by highest average rental yield in the lowest crime category

Location

Average Rental Yield %

Merthyr Tydfil

5.52%

Rhondda Cynon Taf

4.50%

North East Derbyshire

3.84%

North Kesteven

3.75%

West Oxfordshire

3.67%

Wealden

3.64%

East Cambridgeshire

3.60%

Rutland

3.52%

Broadland

3.32%

South Norfolk

3.30%

  • icon

    I imagine rental payment default rates are also higher in those areas where crime is higher. Would be interesting to see the impact on the bottom line.

  • icon

    I imagine rental payment default rates are also higher in those areas where crime is higher. Would be interesting to see the impact on the bottom line.

  • Paul Barrett

    Wrong
    Money is EVERYTHING!
    It is the only reason LL become so.
    As LL become more selective perhaps rent defaulting tenants will realise they won't be able to surf from one mug LL to another.
    LL minds are being severely concentrated by all the recent legislation.
    Abolition of S21 being uppermost in their minds.
    Once the wronguns are declined for tenancies because of their rent defaulting and bad behaviour I believe there will be a seachange in tenant attitudes.
    It will be either behave or be homeless
    Even the criminals want to be housed.
    So paying rent and behaving will be an overriding imperative.
    So don't p### off your LL by not complying with the tenancy conditions.
    Times are going to get a lot tougher for the wrongun tenants!

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    I hope you are right Paul

     
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