The Daily Telegraph - Saturday - Money
The final few areas promising investors the highest yields
Landlords have long been squeezed by tax changes and increasing regulation, as well as falling yields. Recently they have been battered by the pandemic and some city- centre property owners have faced rent falls of up to 12pc in the past 12 months. For many investors, the sums simply do not add up.
But there are some places where tenant demand has risen, and where average yields are more than 10pc. Research by Hamptons International, the estate agent, pinpoints the local authorities across England and Wales where landlords are likely to achieve top yields.
HARTLEPOOL The most financially dependable place in the country to own a buy-to-let is in Hartlepool, Hamptons found. In the north- eastern port town, 56pc of landlords achieve a yield of 10pc or more; far higher than the regional average of almost a third of landlords. By comparison, in London and the East of England just 1pc of landlords achieve that.
The area has held up well during the pandemic, and rental inquiries have risen by about 12pc year- on-year, said Gabrielle McKenna of YoungsRPS, an estate agent. The average house price in Hartlepool is £107,150, with monthly rents at £ 530. High yields are widespread across the town: 98pc of investment properties earn 5pc yields or more.
Other North East rental hotspots include Co Durham and Sunderland, where around 40pc of property investors earn top yields. Gateshead and Middlesbrough also scored highly.
“A number of major employers are setting up in the North East, which has created jobs and attracted renters,” Ms McKenna said.
She added that rural communities around Co Durham and Hartlepool had benefited significantly from the move to working from home. “Tenants can get more for their money, so they can have home offices and gardens for less than they’d pay elsewhere.”
BLAENAU GWENT Second in the rankings was Blaenau Gwent in south- east Wales, where the average yield is 10.2pc. Properties cost about £95,000 and most landlords can earn £540 per month before tax.
Inquiries from people looking to rent in the area have risen sharply since the pandemic started, said Daniel Pavitt of Yopa, another agent. “Before, people didn’t want to rent too far from their work, but now they’re looking to move further into the valleys for more green space.”
Rents and house prices have been rising rapidly in the area, which is a 45-minute drive to Cardiff and 70 minutes from Bristol.
“There’s a lot of people needing to rent and nowhere near enough properties going,” Mr Pavitt added.
It is attractive to investors because of the low price of property and higher rents. It’s possible to buy a three-bedroom semi in bad condition for around £40,000, renovate it for £30,000 and rent it out for £700 a month.