It’s no secret that location is one of the most important considerations for property investors. But one location type in particular comes out on top for yields.
When choosing where to invest in property, there are many aspects to factor in. Which part of the country to invest in might be the first step, whether it be London, the south-east or the north-west.
A new study has now come out which looks at three specific location types for property investment. These are coastal areas, countryside locations and cities. The research, by Howsy, shows that these are the top-yielding location types compared to other areas, such as towns and suburbs.
The best location
Investing in property in a UK city is likely to give you the biggest yields, according to Howsy. Cities can attract yields of an average 5% for investors, which is comfortably above the 3.56% UK average.
The second best location type was the countryside, where average yields can be up to 3.72%. This was followed by seaside areas, with an average top investment yield of 3.59%.
Calum Brannan, founder and chief executive officer of Howsy, says: “Cities are typically the preferred place for a buy-to-let landlord when it comes to investing, largely due to the higher level of rental income and the consistent demand for rental homes. So it comes as no surprise that they are home to the highest yields overall.”
“That said, the coast and country can also prove to be very lucrative and as the figures show, there are plenty of options across both that offer yields way above the national average.”
City hotspots in the UK
For buy-to-let landlords, cities have a number of major benefits. They tend to see the highest rental demand, particularly among young professional tenants who want to live close to jobs, travel options and a social scene. Cities are also a favourite among new graduates who either want to stay on in their university city, or relocate to another city for employment.
Rents in city centres, due to the strong demand, can be higher than surrounding areas. City buy-to-let properties also tend to be apartments, which may come at a lower cost than larger properties elsewhere. Coupled with the higher rents they can attract, it is a popular property type among investors.
With plenty of major new developments popping up across the UK’s major cities, there are several options. Many property investors opt to buy off-plan new-builds as they can often access competitive starting prices and great yields. They also come with the added incentive for tenants to live in a brand new, well-located rental property.
The build-to-rent market, which involves purpose-built rental accommodation normally in city centres, is booming. London is the hotspot for this, followed by Birmingham, and there are hundreds of build-to-rent projects underway in places like Manchester, Liverpool, Leeds, Sheffield and Nottingham.
Investors can spread their portfolios
Today’s property investors are less likely to stick to just one location close to where they live, if they’re UK-based. Most can see the benefits of considering multiple locations for the best returns.
Calum Brannan adds: “While traditionally geographical distance may have made this tricky, the technological disruption of the buy-to-let sector has changed the way we invest and manage in bricks and mortar. With online and hybrid platforms allowing easy management from your front room, there’s no reason why you can’t invest the length and breadth of the UK.”