HSBC mortgages says that the city of Manchester is home to the highest rental yield of 7.93%.
The figure covers the first half of 2015 and Manchester moves up from last year’s second place to win the crown. However, the mortgage firm says that London landlords are experiencing some of the lowest BTL yields in the UK. HSBC Mortgages says that anyone thinking of investing in a buy to let property should look to the North of England where house prices are generally lower and which lead to higher initial returns.
Best areas for BTL investment with best rental returns
The next best areas for BTL investment with best rental returns are Hull and Blackpool.
However, the survey reveals that while Manchester only experienced a small increase in its average house price, it has enjoyed economic progress which has led to a strong tenant demand for rental accommodation. This has led to rents rising to £8,628, a rise of 4% in the last year.
In addition, Manchester's rental demand is being fueled by one of the largest student populations in Europe and the city also has the largest proportion of rental homes in the UK at 26.85%.
HSBC's head of mortgages, Tracie Pearce, said: “Buy to let is attractive for investors but it is important to focus on those locations where rents have outpaced house prices.
“Investors should not just look at large cities and towns but also towards commuter areas with high rental demand and concentrated employment such as having a university or hospital nearby.”
The best area in London for BTL investment is Newham where rental yields of 5.2% been recorded though rental yields in the capital are declining. This is because house prices have been rising without a corresponding increase in rents.
Landlords have an increased responsibility for repairs – warning
Meanwhile, amendments to legislation mean that landlords have an increased responsibility for carrying out repairs to properties they let - especially to the exterior and areas they may not even own.
The warning comes from Rentguard Insurance who say that the changes to the Landlord and Tenant Act 1985 means that landlords have more responsibility.
The firm's director, Steve Jones, explained: “This increased responsibility means landlords will be under pressure to ensure they provide a secure and safe environment for tenants.
“The legislation changes push more responsibility onto landlords and also pose a serious risk because landlords face being sued for not carrying out property repairs.” Landlords are also being warned that they are also responsible for any outdoor areas too including parking spaces, pathways, garages, gardens and stairwells as well is the guttering and exterior brickwork.
One particular issue, says Rentguard, is for a landlord who owns a flat who may be held liable for any trip hazards on the path outside.
