When it comes to identifying the best buy-to-let prospects, identifying the top candidates isn’t always easy.
Headline figures can distort the long-term picture and past performance isn’t always an indicator of future success, but we think we’ve identified five cities that show they have real potential for today’s landlords.
Blackburn
The LandInvest Buy-To-Let Index has revealed that rental yields in Blackburn rose by a staggering 37.8% last year and now sit at a healthy 5.69%. While short-term gains aren’t always the best guide for a long-term investment, there are signs that Blackburn represents excellent value for landlords.
Recent investor conferences suggest that the city has received sustained increased investment as landlords look for a viable alternative to more expensive properties in nearby Manchester. These include investments in office space and local industry, which could create more growth in the area going forward. With average house prices at £95,000, the city really does look good value.
Sunderland
Another surprise contender on the list, Sunderland recently topped Property Partner’s top performing university towns, with a net yield of 6.9%. One of the key reasons for the attractive figure is the low price of property in the area, and the opportunity for reliable rents from the city’s student population. But this does come with setbacks.
Renting to students can affect your landlord's insurance, and they are less likely to be in the property for the long-term. This means higher risk of spells without an occupier, and more letting agent fees to fill the property. In some cases, you may not be covered at all if letting to students.
Edinburgh
Edinburgh may currently register lower yields than Sunderland, at 4.4%, but it has plenty of compelling reasons for landlords to invest. As well as having higher property prices in general, which skews the overall yield, Edinburgh has plenty of amenities that appeal to all sorts of rental demographics.
The world famous Fringe Festival attracts visitors throughout the summer months and appeals to urbane young professionals looking for a unique place to live and work.
Brighton
Down south, Brighton offers an excellent alternative to Edinburgh. While rental yields can’t compete with the low house prices in the North, overall return on investment stands at an impressive 8.38% thanks to rising property prices and a host of local amenities.
As well as matching Edinburgh’s appeal with lots of seasonal events, such as the Brighton Festival in May and a beautiful Victorian seafront, Brighton has become increasingly popular as an alternative commuter town for workers in London. Train journeys into the capital take just under an hour.
Horsham
A recent study by HolidayCottage.com found that West Sussex is the most desirable place for people to own a holiday cottage. But the value to be found in the cities, towns and villages of West Sussex isn’t just about bagging the lucrative long-term summer lets market – it’s about the impact this image as a holiday haven has had on property prices.
On average, properties across the county have a rental yield of 14.3% but in Horsham house prices have registered growth of 35% between 2005 and 2015, making the area stand out as our pick for the county.
Live in any of these cities? Or think your city is missing from the list? Have your say in the comments and let us know what’s your top city for letting. Looking for more information about insurance? With AXA landlord insurance, we make protecting property simple.
