A new survey of buy to let yields in England and Wales reveals Birmingham is one of the brightest spots for investment, even though rents and property prices are higher in London and the South East.
Property firm Move With Us has analysed rents and property values across England and Wales to come up with a top 10 table of buy to let hot spots (see below).
Birmingham neighbourhoods take three out of the top 10 – Nechells, Aston (B7) is top of the list with a return on investment of 10.6%. Castle Vale (B35) with a gross yield of 9.2% is sixth and the Jewellery Quarter (B18) with a return of 8.7% is ninth.
Despite high rents and surging property prices, London does not figure in the top 10.
That’s because gross yields are worked out by dividing total annual rents received by the property value at the year end. So, a £7,500 a year rent on a £150,000 house is a yield of 5%, but 2.5% on a £300,000 house.
The report took worked out yields for two-bedroomed homes for rent and sale.
Most of the best yields are in towns and cities where young professionals like to live close to work, said the report. Rural areas fare badly for yields because homes are more expensive and tend to be owner-occupied.
Doug Shephard, director at Home.co.uk, who helped compile the data, said: “This study is a route map for investors in search of the highest potential rental yields. Landlords need an open-mind about where to invest and not simply look in their immediate area.
“A highly localised approach identifying the ultimate combination of in-demand property types, lower capital investment and higher rental prices will deliver good yields and fewer voids, and maximise potential returns.”
The highest yields in Wales were 7.5% in the north of Cardiff.
Top 10 Yielding Post Codes in England and Wales
| Post code | Gross Yield | |
|---|---|---|
| 1 | B7 (Birmingham) | 10.6% |
| 2 | TN28 (Kent) | 10.5% |
| 3 | L14 (Merseyside) | 9.6% |
| 4 | GU6 (Surrey) | 9.5% |
| 5 | TS1 (Middlesbrough) | 9.2% |
| 6 | B35 (Birmingham) | 9.2% |
| 7 | L4 (Liverpool) | 9.1% |
| 8 | RH4 (Surrey) | 9.1% |
| 9 | B18 (Birmingham) | 8.7% |
| 10 | EN8 (Hertfordshire) | 8.7% |
Source: Move With Us
