Last updated: February 3, 2014 3:04 pm

Regions dominate UK buy-to-let hotspots in 2013

London’s soaring house prices – and the growing gulf between the capital and the rest of the country – have captured the UK property headlines during 2013.

But London slips well down the league table when it comes to the highest yields for buy-to-let landlords, according to a survey of 50 UK cities by online property portal Zoopla.

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Average gross yields from buy-to-let properties in the capital were 5.1 per cent, dwarfed by Coventry, which topped the table with average gross yields of 8.9 per cent.

Many of the leading cities (full table below) have thriving universities, a significant factor in boosting rents and yields.

Lawrence Hall of Zoopla.co.uk, said: “The largest yields are found in areas where there is the combination of high demand for rental accommodation but relatively low property prices. This allows landlords to purchase investment properties at a reasonable price while rents remain competitive due to the imbalance of supply and demand.

“Areas such as Coventry, Southampton, Liverpool and Manchester are good examples of this. All have large populations which may not be able to afford to purchase a property, despite the relatively low prices and so rely on the private rental sector. In contrast, areas such as London have lower yields despite some of the highest demand for rental property. This is due to sales prices being so much higher having a significant impact on landlord returns.”

However, Lucian Cook, head of residential research at Savills UK, cautioned that many of the areas could be subject to costly void periods and that landlords should be selective about where they buy property.

“Investors should have regard to the fact that the highest yields are generally available in lower value urban markets of the Midlands and the north where the prospects for house price growth in the next five years are some of the weakest. Those looking for a balance between income yield and prospective price growth in the medium term should look towards markets such as Oxford, Southampton and York, investing across a range of stock from flats to small family houses.”

Buy-to-let yields – UK cities 2013
City Gross yield % Average asking rent (per month)
Coventry 8.9 £914
Southampton 8.4 £1,359
Liverpool 8.3 £605
Manchester 8.2 £1,041
Sheffield 8.1 £816
Cardiff 8.0 £1,209
Sunderland 7.7 £613
Salford 7.6 £826
Stoke-on-Trent 7.2 £517
York 7.2 £1,109
Glasgow 7.2 £601
Aberdeen 7.1 £1,211
Oxford 7.1 £1,856
Canterbury 7.0 £1,174
Preston 7.0 £586
Nottingham 6.9 £726
Leeds 6.8 £888
Durham 6.8 £687
Leicester 6.8 £764
Lancaster 6.8 £608
Inverness 6.7 £668
Newcastle upon Tyne 6.7 £869
Wolverhampton 6.7 £577
Bradford 6.7 £484
Dundee 6.6 £540
Bristol 6.6 £949
Wakefield 6.3 £575
Newport 6.3 £628
Exeter 6.2 £1,048
Bath 6.2 £1,405
Portsmouth 6.2 £984
Derby 6.1 £621
Stirling 6.0 £688
Carlisle 5.9 £475
Birmingham 5.8 £646
Plymouth 5.8 £689
Gloucester 5.7 £640
Brighton 5.7 £1,251
Peterborough 5.7 £703
Norwich 5.6 £764
Lincoln 5.6 £579
Edinburgh 5.5 £957
Swansea 5.4 £555
Ely 5.4 £969
London 5.1 £2,817
Lichfield 5.1 £711
Cambridge 4.9 £1,215
St Albans 4.8 £1,356
Winchester 4.8 £1,524
Wells 4.7 £775
Worcester 4.7 £641
Hereford 4.7 £658
Chichester 4.6 £1,040
Salisbury 4.5 £1,044
Truro 4.5 £800
Ripon 4.4 £766
Chester 4.3 £654
Bangor 4.2 £436
 Source: Zoopla.co.uk, December 2013

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