Landlords are reaping the greatest rewards from rental yields in the north west, while the market still remains more affordable for tenants than elsewhere in the country.
New research has revealed the areas in the country where landlords can expect to achieve the highest rental yields, with the north west clearly dominating the leaderboard.
The report from Sequre Property Investment, compiled using Rightmove data, found that over the past year, rents had increased by 23.4% across Manchester, with tenant demand in the city soaring and multiple new developments expanding the options for places to rent.
London-leavers are particularly attracted to the city due to the lower cost of living and the wide-ranging jobs market and infrastructure, despite the rent rises.
Buy-to-let landlords have increasingly been looking to the country’s regions for their next investments in recent years, as alongside healthy yields is the prospect of greater capital appreciation over time. Savills marks the north west as having the potential for the greatest house price gains in the next five years.
Top postcodes for rental yields
The best postcode for rental yields, according to the research, was M14, where the average taken by landlords is 9.6%. The area is just to the south of Manchester city centre, encompassing the areas of Fallowfield and Rusholme.
Next is the Manchester postcode of M13, where landlords are getting back around 7.2% through rental income. Chorlton-on-Medlock and Levenshulme are situated here.
Liverpool is another city in the north west that is regularly celebrated for its rental yields, thanks to its lower than average property prices coupled with high tenant demand. Recent regeneration has also increased its appeal, and pushed rents up.
The L4 and L7 postcodes both appear towards the top of the report’s list, both achieving yields of an average of 6.9%. L20 (6.5%) and L2 (6.4%) are also strongly performing areas for landlords, while in Manchester M6 (6.6%) and M9 (6.3%) are also notable.
Property investment in the north
The property investment landscape in many parts of the north of England continues to lure property investors, including those who have historically focused their efforts on the traditionally revered London market.
Sequre Property Investment has seen an increase in the number of buyers seeking high-yielding flats in the region.
Daniel Jackson, sales director of Sequre Property Investment, says: “Over the last 12 months, 56.4% of our investors have purchased property within the North West. This represents a 20% increase year on year.
“The average investment is £125,000 and the majority of buyers are opting for apartments, which are giving an annual yield of between 6-8%.”
Jackson points out that high levels of investment in the north are driving demand for high-quality rental homes for professional tenants, which is another force behind the strong rental yields landlords are seeing there.
“The Powerhouse North is currently worth £339bn to the UK economy and there are hundreds of billions extra earmarked for development projects such as the HS2; Northern Powerhouse Rail; £4bn of Leeds city centre projects; and £800m Salford University expansion.”
Areas of focus
In Greater Manchester, Sequre highlights Bolton as a promising hotspot for investors, where prices have increased by 16.9% over the past year. House prices remain much more affordable than other areas, though, with the company pointing out that brand-new apartments can cost just £100,000.
Jackson says: “Bolton retains a healthy mix of professional tenants, families and students making it ideal for investors wanting a strong yield and capital appreciation.”
The Manchester market remains hugely popular for its investors, while Liverpool always sees record demand when new property investment opportunities become available.
Another recent contender as a top property investment hotspot for rental yields, capital growth and high tenant demand is Stockport. We’ve noted an increase in opportunities there as the area benefits from regeneration and investment.