A new report into the best postcodes for buy-to-let rental yields has produced a surprise winner.
According to data from property peer to peer lending platform LendInvest, Birmingham is the city where the greatest rental yields can be achieved. Other front runners include Ipswich, Liverpool and Glasgow.
Despite Birmingham beating London in terms of rental yields, the capital still has postcodes which deliver the best overall returns on investment as a result of capital gains pushing up house prices.
Rental yields are working out by taking the yearly rental income from a property and then calculating this as a percentage of the total property value. By using one-million sales and five-hundred thousand rental listings from Zoopla, LendInvest then took the average rental price per year and divided that figure by the average property asking price.
The data revealed that four one the top ten highest rental returning areas are in England’s second city, with returns of 13.6% in B44, 11.9% in B42, 10.5% in B98 and 9.1% in B23. In Ipswich, landlords average returns are 10.8% in IP4 and in Liverpool, landlords can achieve a yield of 9% in the L28 postcode area.
Birmingham top buy-to-let hotspot
Jane Morris, managing director of Property Let By Us, feels that more landlords are branching out in order to achieve maximum yields. Morris said that, ‘many landlords tend to invest near to where they live, but if they look further afield, they could easily increase their yields and capital growth.’ She continued by saying that, ‘the Midlands provides a great investment opportunity as the property is much more affordable than the South East and the yields are high. For example, in Coventry, a three bed semi will cost around £125,000 and will provide rental yields of around 6.57%.’
Morris went on to say that, ‘many of the landlords that we work with are netting between 6.57% and 9.1% from their properties in Birmingham, Coventry and Nuneaton. My advice to any landlord looking to invest outside their area is carry out through research on property prices, rent prices and yields to ensure they make the right investment.’