Tuesday, 10th February 2015

Manchester Named as Buy-to-Let Hotspot

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Landlords looking to buy property in the UK to rent out should be aware of the wide differences in rental income across the country.

For example, if you became a buy-to-let investor in Manchester rental yields are as high as 7.98 per cent whereas some parts of London only offer yields of 2.7 per cent as property prices have rocketed so much in parts of the capital.

The "yield" is the annual return, calculated by expressing a year's rental income as a percentage of how much the property cost.

According to research from HSBC, Manchester ranks second for the highest rents for buy-to-let investors.

Peter Dockar, head of mortgages at HSBC, said: "Landlords outside of London are reaping the benefit as young professionals say goodbye to capital living in favour of more affordable commuter towns."

However, London is still very popular among foreign investors and expats alike given its stable prices and strong rental demand. While rental yields have been squeezed, capital appreciation has been strong in recent years. For buy-to-let landlords only interested in the highest rental yields it may pay to look further afield in places such as Manchester.

According to HSBC’s hot spots, many northern cities make it into the top locations for rental yields including Nottingham, Manchester, Blackpool and Hull. This is attributed to their relatively low house prices combined with strong demand for rental property from students and young professionals.

One city seeing rapidly rising yields is Reading which is home to many multinational companies and a large university. The prospect of Crossrail and the redevelopment of much of the town centre is expected to be a boon for the area in the coming years. Crossrail is a high-speed trainline that will provide a new east-west line across Greater London and its surrounding area. It is due to be completed by 2018.