Rental yields. Investment property in northern England outperforming the rest of the UK

Rental yields. Investment property in northern England outperforming the rest of the UK

Many northern cities are now greatly outperforming London in terms of rental yields. As a result, increasing numbers of investors are looking beyond the capital for the best property deals.

 

Summary

  • Cities in the north of England saw the biggest increase in rental yields in 2016
  • With returns of 6.7% Manchester is named the city with the highest rental yields in the UK
  • Northern cities are greatly out performing London where the average rental yield is just 3.2%. Investors are now increasingly looking outside the capital, to cities where potential returns are higher

2016 saw the north of the UK achieve the highest rental yield growth, according to research carried out by peer-to-peer lending platform, Kufflink, in a study examining the median rent in 50 major UK

Manchester is the top performing city, generating average rental yields of 6.7%, while Hull, Rotherham and Doncaster in Yorkshire achieved the largest rise in average rental returns, with increases of up to 0.31%.

Tarlochan Garcha, Chief Executive Officer of Kuflink, commented: “Buy-to-let properties in the north can be a steady investment, attracting renters who cannot afford to step onto the property ladder and therefore choose to rent in good locations, which are well-suited to their lifestyle.”

The story in the south however is very different. With average yields of just 2.7%, Cambridge provided the worst returns, while London averaged 3.2%, less than half that of Manchester.

Despite the high rents achievable in the capital, rising house prices, averaging more than £680K mean buy-to-let landlords are left with relatively meagre returns, compared to their northern counterparts.

Mr Garcha commented: “Manchester and Leeds are both bustling cities, popular with young professionals and families, and can offer solid returns for landlords. It could be time for landlords to turn their attention away from pricey London and look to the UK’s regional cities.”

Buoyed by more favourable capital and rental growth, Manchester has in fact seen increased investor interest over the last 12 months, and with the city at the forefront of build-to-rent, this interest is only expected to grow further in the coming years.

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