Regions dominate UK buy-to-let hotspots in 2013

Coventry tops table with 8.9% yield

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.

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
CityGross yield %Average asking rent (per month)
Coventry8.9£914
Southampton 8.4£1,359
Liverpool8.3£605
Manchester8.2£1,041
Sheffield8.1£816
Cardiff8.0£1,209
Sunderland7.7£613
Salford7.6£826
Stoke-on-Trent7.2£517
York7.2£1,109
Glasgow7.2£601
Aberdeen7.1£1,211
Oxford7.1£1,856
Canterbury7.0£1,174
Preston7.0£586
Nottingham6.9£726
Leeds6.8£888
Durham6.8£687
Leicester 6.8£764
Lancaster6.8£608
Inverness6.7£668
Newcastle upon Tyne6.7£869
Wolverhampton6.7£577
Bradford6.7£484
Dundee6.6£540
Bristol6.6£949
Wakefield6.3£575
Newport6.3£628
Exeter6.2£1,048
Bath6.2£1,405
Portsmouth6.2£984
Derby6.1£621
Stirling6.0£688
Carlisle5.9£475
Birmingham5.8£646
Plymouth5.8£689
Gloucester5.7£640
Brighton5.7£1,251
Peterborough5.7£703
Norwich5.6£764
Lincoln5.6£579
Edinburgh5.5£957
Swansea5.4£555
Ely5.4£969
London5.1£2,817
Lichfield5.1£711
Cambridge4.9£1,215
St Albans4.8£1,356
Winchester4.8£1,524
Wells4.7£775
Worcester4.7£641
Hereford4.7£658
Chichester4.6£1,040
Salisbury4.5£1,044
Truro4.5£800
Ripon4.4£766
Chester4.3£654
Bangor4.2£436
Source: Zoopla.co.uk, December 2013
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