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Wales offers highest rental yields

The Central Valleys in Wales has the highest rental yields in England and Wales, netting investors a hefty return of 7.96%, research from Molo has revealed.

The average monthly rental income in the region is £697, which is relatively low compared with other areas, though average property prices in the Central Valleys are some of the lowest, averaging at just £100,786.

When it comes to the top ten places for high rental yield, all are either in the North, Midlands or Wales.

Profitability has typically decreased across England and Wales, with the average rental yield standing at 4.98%.

Francesca Carlesi, chief executive at Molo, explains, “From a rental yield perspective, areas to target at the moment include locations in the north of the country (with low property prices and high rental prices), as well as commuter cities (with a high demand for properties).

“However, it’s important to also consider fast growing cities or university areas which will allow a steady stream of tenants and have strong capital investment growth.”

Gross rental yields in the area are only slightly below the Central Valleys, at 7.90%.

While average monthly rental income is over £100 less than in the Central Valleys, at £592, and the average property values are also significantly lower, at £85,774.

The third best place for rental yield is another area in the North East, South Teesside, which sees a gross rental yield of 7.66%. Swansea (gross yield of 7.30%) and Coventry (gross yield of 7.06%) round off the top five ranking places in the UK for rental yield.

Camden and the City of London the lowest yielding location

With a gross rental yield of 3.58%, which is one third less than the national average, Camden and the City of London has been revealed as the lowest yielding rental location for buy-to-let property.

While average monthly rental income is one of the highest on the list, at £2,268, the average property price is very expensive here too, at £672,104 – the sixth highest on the list.

West Essex is another area that has a low rental yield, meaning it can be difficult to make a profit on a buy-to-let property, with a gross rental yield of 3.64%.

Average monthly rental income is relatively high compared to the national average, at £1,800, but property prices are expensive in the area, at £548,000.

Dorset (gross yield of 3.67%), Bromley (gross yield of 3.69%), and North Yorkshire (gross yield of 3.70%) round off the top five lowest yielding areas in England and Wales.