Winchester named most vulnerable place in the UK for landlords, Bootle the best
Landlords in the English city of Winchester are the most vulnerable in terms of tax changes, voids, rental values and yields, new research has found.
Tax changes mean landlords have to consider array of local factors to protect returns and in Winchester available rentals have sat empty for 248 days, rents are over half of average earnings and yields are half those of top towns and cities
The analysis of the key metrics affecting landlords from Gatehouse Bank also shows that the next most vulnerable location is Cambridge, followed by Chichester, Warwick and Reading.
Meanwhile, the North and Midlands dominated the listings of the places where landlords are least vulnerable. Bootle in Merseyside emerged as the best place to offer rental property followed by Inverness, Stoke-on-Trent, Barnsley and St Helens.
It explains that tax changes, including the additional home stamp duty surcharge and tapering of mortgage interest relief, have constrained the buy to let market in recent years, resulting in an environment where yield alone can no longer be the primary consideration for landlords.
The study takes into account the second tier of economic indicators including how long available rentals have been on the market, as well as the affordability ratio between average salaries and rents.
This is in contrast to studies that look solely at yield, which would currently identify Padstow, Bedford, Taunton, Shrewsbury and Salisbury as making up the least attractive buy to let locations.
The study shows that in worst placed Winchester, properties for rent have been sitting on the market for almost a third longer than in favourable Bootle at 248 days compared to 183 days. In Bootle the average yield was 5.6% compared with 3.1% in Winchester.
Of the UK’s major cities, Manchester ranked 34th, Birmingham lay in 75th position, with Glasgow ranked 43rd. London, where high property prices shrink yields and deter landlords is ranked 89th.
Tenants in Edinburgh and London pay the highest rents compared to earnings. These cities came bottom, 121st and 122nd, when ranking this indicator, with rents coming in at 73% and 92% of local average earnings respectively. Meanwhile Oxford at 70.8%, Guildford at 69.3% and Brighton at 66.6% all fell into the bottom five.
In contrast, the top three cities for affordability, all of which are based in the North of England, with earnings to rent ratios that are three times less. Tenants in Hartlepool, Darlington and Stockton on Tees make up the top three. Tenants in these areas can expect rents that are 17.5%, 19.6% and 19.9% of earnings respectively.
Overall, the study found properties available to rent across the UK have been sitting on the market for 197 days on average. Meanwhile the typical yield is 4.6% and the average proportion of earnings to rent is 37%.
‘What our research shows is that famous Northern hospitality is not a myth. It’s a great place not only to be a landlord but also to live, with cities in the North and the Midlands performing much better across all indicators,’ said Charles Haresnape, chief executive officer at Gatehouse Bank.
‘Rental properties are let far quicker than in the South, which is no surprise when major cities like Liverpool and Manchester are within commuting distance of smaller towns like Bootle. What’s really striking is that in the areas that performed best, rental rates were far more affordable and this correlation underscores the symbiotic relationship between renters and landlords in areas where their investments could be deemed safest,’ he added.