Buy-to-let property investments in Manchester and Southampton are offering the highest yields in the UK, new research shows.
Summary:
- Property investors can find the highest residential yields in Manchester and Southampton
- The value of buy-to-let mortgages have increased by over a third in 2014
- Investors believe property can achieve higher rates of return than their savings
The first report of 2015 has found Southampton and Manchester to be the two highest yielding buy-to-let property investment locations in the UK.
Research from HSBC covering the end of 2014 revealed that Southampton offers investors gross residential yields of 9% while Manchester buy-to-let property investments are generated a yield of 8%.
The yield is calculated comparing an average year’s rental income against the average property price in the area. London was not in the top ten buy-to-let property investment locations due to the high asking prices seen in the capital and the absence of a market capable of paying the rents to live in these expensive properties.
Other cities that fared well in the index included Liverpool, Nottingham and the university-focused Oxford and Cambridge.
Many buy-to-let purchasers are individual investors looking to secure a property asset in the hope of earning a return higher than their savings accounts are currently offering them. HSBC’s report revealed that between January and November 2014 the value of buy-to-let mortgages on new purchases has increased by 34% to £11.6 billion, which represents a rise of £3 billion over the corresponding period in 2013.
Commenting on the figures, Mark Harris, Chief Executive of mortgage broker SPF Private Clients, stated it was “no real surprise” more people are prepared to make a buy-to-let investment, as the potential returns on offer are far in excess of “pitiful” saving rates.
This trend of so-called ‘amateur’ landlords is expected to gather further traction in April, when radical pension reforms allow people approaching retirement age to withdraw their retirement savings. Before making any sort of investment people should be aware of the risks involved and conduct thorough research on the buy-to-let market and other investment classes.