Please Note: This Article is 6 years old. This increases the likelihood that some or all of it's content is now outdated.

Despite London’s high rents and expensive property prices, the the places with the highest buy to let yields are all outside the capital.

A new study looking at buy to let yields on two-bedroomed homes for rent and sale shows some of the highest returns on investment are in the second city of Birmingham, which has three post codes in the buy to let yield top 10.

The research, by property firm Move With Us, shows that landlords find the best yields in the most densely populated areas.

This is mainly due to young professionals who cannot raise a mortgage renting in towns and cities to live near work and nightlife, while rural areas tend to attract older and wealthier homeowners rather than renters.

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The survey looks at rents in England and Wales – and no Welsh post codes make the top 10. The best performing neighbourhood in Wales is the north of Cardiff, with yields of 7.5%.

Doug Shephard, director at Home.co.uk, who helped compile the data, said: “This study is a route map for investors in search of the highest potential rental yields. Landlords need an open-mind about where to invest and not simply look in their immediate area.

“A highly localised approach identifying the ultimate combination of in-demand property types, lower capital investment and higher rental prices will deliver good yields and fewer voids, and maximise potential returns.”

London yields are low because the formula of calculating annual rents against property values gives a low return in the capital because property prices are typically higher than the rest of the UK.

Gross rental yield is calculated by taking the the total annual rent and dividing by the property value expressed as a percentage, so an annual rent of £10,000 on a property worth £100,000 is a yield of 10%.

Top 10 Yielding Postal Districts in England & Wales

Post code Gross Yield

1

B7 (Birmingham) 10.6%

2

TN28 (Kent) 10.5%

3

L14 (Merseyside) 9.6%

4

GU6 (Surrey) 9.5%

5

TS1 (Middlesbrough) 9.2%

6

B35 (Birmingham) 9.2%

7

L4 (Liverpool) 9.1%

8

RH4 (Surrey) 9.1%

9

B18 (Birmingham) 8.7%

10

EN8 (Hertfordshire) 8.7%

Source: Move With Us

 

Please Note: This Article is 6 years old. This increases the likelihood that some or all of it's content is now outdated.

6 COMMENTS

  1. \”Gross rental yield is calculated by taking the property value and dividing by the total annual rent and expressing as a percentage, so an annual rent of £10,000 on a property worth £100,000 is 10%.\”

    You\’ve got this calculation backwards, it should be
    \”Gross rental yield is calculated by taking the total annual rent and dividing by the property value and expressing as a percentage, so an annual rent of £10,000 on a property worth £100,000 is 10%.\”

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