Midlands and north of England come out top for buy to let yields

Liverpool and Nottingham are the UK’s best performing property investment locations, according to mortgage broker Private Finance. 

Both cities enjoy average rental yields of 6.2 per cent once mortgage costs are taken into account. While Liverpool has retained its position since May 2017 – despite lower rental yields due to falling rental prices in this area – Nottingham has moved up from second position thanks to a £121 increase in average monthly rents.

In third position is Cardiff, with average yields of 6.0 per cent: Southampton and Greater Manchester make up the top five. 

Coventry, Edinburgh, Leicester, Brighton and Bournemouth come next.

Across the top 10 hotspots, rental yields have risen by an average of 0.9 percentage points since May 2017.

The brokerage also says there was a slight increase in average mortgage rates towards the end of 2017 as November brought the first interest rate rise in 10 years to 0.5 per cent.  

However, Bank of England data shows the average two year 75 per cent loan-to-value BTL fixed rate is at its lowest point (2.47 per cent) since tracking began in January 2012 and has fallen by 15 basis points since May 2017. 

As a result, it claims, many landlords across the UK will have seen their annual mortgage costs fall. 

However, in some areas house prices have risen too quickly for landlords to benefit from falling rates. In the top 10 hotspots, Nottingham has seen the greatest increase in house prices since the analysis was last carried out (from £127,302 to £138,937 – an increase of 9.0 per cent).

“Though the buy-to-let sector is facing many challenges, one area where landlords have benefited is falling mortgage rates. However, seeking independent advice is becoming increasingly important for landlords to find and be accepted for the best deals” says a spokesman for the company.