Lower income areas - often with lower-priced homes too - produce higher yields than more affluent locations, new research shows.
Lettings management platform Howsy has looked at each UK local authority and its average net annual income as well as the average rental yield on offer.
Results indicate areas with low annual net income between £20,000 and £25,000 were also home to the lowest average rental cost at £453 per month.
The average rent climbs consistently higher as average annual income increases, with areas boasting an average income of £45,001 or higher having a typical rent of £1,606 per month - that’s 255 per cent higher than the lowest income areas.
However while rents may be higher, areas with the highest average income don’t make for the best buy-to-let investment where yields are concerned.
So in those areas with the highest average monthly income, the average rental yield is currently just 3.4 per cent.
This average yield then increases consistently as the average net salary starts to drop.
In areas where the average monthly earnings are £20,000 to £25,000, average yield is the highest of all at 5.1 per cent.
Howsy chief executive Calum Brannan says there’s a common misconception that you need to invest big and in an affluent area if you want a stress-free, high return investment in the buy to let market.
“But this is rarely the case” he says, adding: “Areas with higher earners are always going to require a much largest investment cost upfront. We’ve also seen the huge problems posed in the most affluent areas of London, in particular, whereby professional crooks take over a property to sub-let for months on end to the financial detriment of the landlord.”
He says this kind of problem is far less common in cheaper locations.
“The bonus for landlords investing in this segment of the market is that investment costs are lower and as a result, yields are much more favourable. Should any problems arise, the cost to return a property back to its original standard is also far lower and so all in all, a less affluent area is actually the best place to invest” he concludes.