TotallyMoney.com’s latest interactive buy-to-let investment map makes fascinating reading for anyone living in or around Manchester.
The city’s M14 postcode area ranked 4th for yield amongst the UK’s best areas for those building a property portfolio; the yield being the return an investor can expect on their investment, worked out by dividing the ‘median asking price’ by the ‘median monthly rent’.
In simple terms, the proposition for a thrifty landlord is to buy a house with a low asking price which commands a relatively high amount of rent, and it’d appear that the M14 area bears these characteristics.
The average rental yield for a landlord in the UK is a healthy 4.17%, so local landlords will be rubbing their hands at the prospect of yields around the 8.71% mark.
Homes in the M14 postcode area typically demand an asking price of £134,950 and rent of £980.
As Zoopla suggests, this is based on a mixture of attractive three bed terraces, combined with pleasant inner city flats just south of Manchester. M14 includes areas such as Moss Side, Ladybarn, Rusholme and Fallowfield.
The M38 postcode weighs in with an impressive 7.63% yield, whilst also illustrating how landlords may be contributing to the housing crisis – snapping up cheap property to then rent out for relatively high prices.
M38 contains houses in places like Little Hulton, which can often be fairly reasonable in terms of price, forming an important rung on the housing ladder for first time buyers.
Sheffield postcode area S1 tops the buy-to-let league with a huge yield of 11.06%. This is based on a very low median house price and a high monthly rent, Aberdeen’s AB24 postcode area follows closely with a 10.43% yield.
A key correlation here could be prominent student populations, who need temporary accommodation and may be willing – or obliged – to pay more for it.
There’s a definite North/South divide in the yields available to landlords, as it appears there’s less return to be made by London landlords who may be new to the game.
Property prices in London are huge and the amounts a landlord could possibly charge for rent are way out of sync. A tenant in Chelsea could be paying £3,120 a month, set against house prices over £1.7m.
Nigel Pocklington, CEO of TotallyMoney.com said: “Although property prices are rising faster in London than the rest of the UK, this growth rate hasn’t been mirrored in rent prices.
“Property investors looking for high yields on rental developments could see the best returns from northern cities or Scotland.”
The conclusions here seem quite simple; affluent London suburbs and rich Surrey neighborhoods haven’t been subject to the buy-to-let epidemic.
Places like Tonbridge and Beaconsfield are composed of huge family homes, which it wouldn’t be realistic to let-out.
The TotallyMoney.com heat map is as useful as a sign-of-the-times/social study as it is for prospective landlords.
It shows both the nature of housing in each of the UK’s cities, along with public demand which is reflected in the rental prices.
So whether you’re a landlord or a government official, the map makes for an interesting read.
To view the map, click here.
Image courtesy of Images Money, with thanks.