The North of England and Scotland see best rise in rental yields in UK

Towns in the North of England and Scotland saw the biggest increase in rental yields at the end of 2016, achieving yields of up to 4.3% while in London they averaged just 3.2%.

Properties in Manchester and Salford saw average rental yields of 6.7% and 6.6% while Cambridge provided the worst returns, with average rental yields of 2.7%, according to the latest buy to let index.

The data from peer to peer lending platform Kuflink examined the average house price and median rent in 50 major towns and cities across the UK and calculated the average rental yield for each location.

Manchester came out on top, providing an average rental yield of 6.73%, closely followed by neighbouring Salford, which provides returns of 6.68.

The North of the UK showed the most rental yield growth. Hull, Rotherham and Doncaster in Yorkshire, and Aberdeenshire and Edinburgh in Scotland, achieved the largest rise in average rental yields between October and December 2016, with increases of up to 0.31%.

Cities in the North greatly outperform London. Despite the high rents achievable in the capital, rising house prices, at an average of more than £680,000 in December 2016, mean that buy to let landlords are left with relatively meagre returns.

Research also showed that there are now fewer than 41,000 properties under £250,000 available in the UK, down from 58,000 available in October, a drop of 29%. There are now fewer than 2,000 properties under £250,000 on the market in London as prices continue to soar. Birmingham saw the biggest drop in properties available for under £250,000, with a decrease of 1373 between October and December 2016, followed by Bristol, with a decrease of 1017 properties.

As well as Cambridge the towns of Chester, Chelmsford and Wolverhampton also had lower yields at 3.04%, 3.07% and 3.27% respectively.

‘Buy to let properties in the North can be a steady investment, attracting renters who cannot afford to step onto the property ladder and therefore choose to rent in good locations, which are well-suited to their lifestyle,’ said Tarlochan Garcha, chief executive officer of Kuflink.

‘Manchester and Leeds are both bustling cities, popular with young professionals and families, and can offer solid returns for landlords. While Birmingham, which has a growing business district and is soon to benefit from HS2, cutting journey time to London to just 49 minutes, is also firmly on the map as a strong buy to let spot. It could be time for landlords to turn their attention away from pricey London and look to the UK’s regional cities,’ he added.