It’s no secret that in many places, house prices in the North of England are far cheaper than the South. It’s often the butt of many jokes and Buzzfeed articles, for the price of a square of land in London you can purchase a five-bed mansion up North etc. Whilst such claims may be a tad farfetched, on many occasions they do ring true, you can purchase a sizeable detached family home in the likes of Manchester for the same price a one bedroom flat in London may set you back.
It was found that house prices in London are 3.5 times more expensive than that in the North East and now, new research has confirmed that the North of England also offers the best investment for buy to let landlords. This is down to a combination of both affordable prices and rental return. The most efficient location is said to be Stoke on Trent, with Oldham second and Liverpool not far behind. In terms of yields, Leeds is the highest found of 100 towns and cities surveyed.
In all, the ten most efficient areas to become a landlord in the UK are all in the North whilst every one of the ten least efficient buy to let locations are in the South. Poole, Dorset was found to be the least efficient, followed by central London and Kent’s Sevenoaks.
It was also found that investors are able to enter the buy to let market with more ease if their income is relatively high compared to local property prices. In addition to this, they will earn a stronger rate of income return if those properties command high levels of rent relative to their price. The remaining top ten areas are; Leeds, Middlesbrough, Newcastle, Stockton-On-Tees, Gateshead, Rotherham and Rochdale. Elsewhere, the rest of the least efficient are Bournemouth, Cambridge, Oxford, Winchester, St. Albans, Chelmsford and Brighton.
Leeds shared the highest yield of all towns and cities in the 100 surveyed at 6.92% overall, Gateshead came second yielding 5.78%. Stoke-on-Trent yielded slightly less at 5.67%, followed by Rochdale with 5.6% and Newcastle with 5.59%. At the other end of the scale, the lowest yield was in Poole at 1.94%, followed by Sevenoaks at 2.48%, Cambridge at 2.51%, Chelmsford 2.53%, St Albans 2.55% and Bournemouth 2.68%. All markets with such low yields experience high demand from own occupiers, all prepared to pay premium prices for popular locations.
It is clear that there is a North-South divide in the investment opportunities facing buy to let landlords. It has long been highlighted that prime locations such as Kensington and Chelsea offer some very low yields available, this is because prices have surged ahead while rents have struggled to keep pace. There is certainly a message for landlords here, they must understand that areas with less demand are often the best locations for investment.