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Liverpool – the UK’s top hotspot for BTL investors

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New research from mortgage broker Private Finance reveals that Liverpool is the UK’s number one buy-to-let hotspot, with landlords achieving average rental yields of around 8% after mortgage costs.

The data - which calculated rental yields in the 50 UK towns and cities with the highest proportion of private rental housing stock and was reported on the Landlord Today website - reveals that a combination of low average home prices at £122,283 and strong rents at £1,021 per month means that landlords are achieving high rental yields.

The study also highlights that:

  • Nottingham attract the next highest yields second at 5.6%;
  • Coventry attracts the third highest average yields at 5.4%;
  • Greater Manchester comes in fourth with average yields of 4.3%;
  • Portsmouth is fifth best performer for rental yields at 4.2%.

Even though property prices are higher in the south, only three of the top 10 buy-to-let hotspots are located there (the coastal towns of Portsmouth, Bournemouth and Southampton, which are popular for student and holiday rental markets).

The findings suggest that property prices and mortgage costs can be more influential than rental income when analysing which locations provides the best rental yields.

According to the study, six out of 10 of the areas with the lowest house prices are also in the top 10 list for best rental yields. Conversely, none of the locations with the top 10 highest average rents are hotspots for BTL investors. Situated almost exclusively in London, these locations bring up to £5,000 in monthly rents – but come associated with hefty purchase costs.

Shaun Church, from Private Finance, commented: “It’s not only the residential property market that’s all about location, location, location. Many landlords will treat property as a long-term investment, looking for reward in the form of capital gain.

“Succeeding in making a long-term profit depends on buying an affordable property and being confident its value will appreciate at a higher rate than mortgage borrowing. However, for more immediate returns, landlords can optimise rental yields by choosing their buy-to-let location carefully.”