When it comes to property yields, it’s not so grey up North...
Certain parts of Scotland offer the highest rental yields of anywhere in the UK. According to Zoopla*, the top 5 areas with the best rental yields are all in Scotland. Specifically they are: East Ayrshire, West Dunbartonshire, North Lanarkshire, Renfewshire and North Ayrshire. All five of these areas sit around the 8% mark with the highest being East Ayrshire with a yield of 8.48%. The combination of low property prices and a steady monthly rent means these areas offer a great investment option for landlords. If you’re looking for incredibly high yields then these parts of Scotland are a great option.
The North East offers great buy-to-let opportunities
North East England is the next most dominant area for investors. A cluster of university cities up in the North East generate high buy-to-let yields. Middlesbrough is first with an average yield of 7.64%, followed by Sunderland at 7.61%*. Newcastle is also a great investment area with rental yields of 5.8%. The low house prices in these areas allow for great investment opportunities and the large student population opens up a world of potentially even higher returns.
“We can see a clear trend with high yields across the UK. All of the top hotspots are in Northern England or Scotland. The significantly lower house prices in these areas certainly play a role in the higher yields generated for investors. If this is your goal and you’re looking for properties with good yields to help build your future deposits up, then these regions are golden.” says Sharon Donaldson, Managing Director at Countrywide.
Where else offers high yields for investors?
As you can see from the graph below, asking prices are starting to settle after a peak in 2022. For those of you looking to invest in buy to let property, 2023 could become a good time to do it.
Liverpool and Manchester swoop in next. These two cities have average yields of between 5-7% with some postcodes fetching even more. For example, M11 and M23 in Manchester currently fetch upwards of 8%** and L33 and L4 reaching the 9% mark***. One of the big reasons the North-West is such a great place to invest is because it has thriving student communities, and a constant stream of diverse, high net-worth industries based in its cities. Young professionals are a key rental demographic here. Predictions estimate that the North West region, in general, will see house prices rise by 24% through 2024, so it’s a great place to invest.
Where are the UK’s worst areas for buy-to-let yields?
Unsurprisingly, higher house prices have a knock-on effect on rental yields. The top 5 worst postcodes for rental yields are NW, SW, W, WC, and EC - all of which sit in London. The City of London actually offers a 3.43% rental yield despite having incredibly high monthly rents. It’s worth remembering that house prices have risen by £380,200 since 2011 and £739,800 since 2001. So if you’re looking for areas of capital growth, the City of London is quite a safe bet.
You can learn more about where property prices have increased this year in our latest blog post. We recommend that you do your own research before committing to any investment.