According to research carried out by independent mortgage brokers Private Finance, Southend-on-Sea is the UK’s number one buy-to-let hotspot with attractive rental yields and affordable house prices. Landlords can enjoy a steady rental income with yields of up to 6.6% and an annual rental income of £23,280 in the resort town. The affordable house prices in Southend-on-Sea give landlords the opportunity to benefit from excellent returns, with the average price of a home in the seaside town costing slightly more than the national average.
The benefits that come alongside living in a popular seaside town married with the prime location have long made Southend-on-Sea popular among renters and now also landlords who are looking to enjoy profitable returns outside the hustle-and-bustle of the capital. The resort town, which is less than an hour’s commute from London, also benefits from various transport links such as airport and train connections.
Renting in London can be extremely expensive and for many, it simply isn’t an option. That is why a rising number of people, especially young professionals and students are seeking alternatives. Small towns such as Southend-on-Sea offer a relaxed lifestyle at a fraction of the price whilst being a commutable distance away from the capital. Southend and other towns situated on the outskirts of London offer a range of opportunities for buy-to-let investment and landlords as a result of the growing rental demand.
The research carried out by Private Finance found that Southend-on-Sea was the number one hotspot for buy-to-let whilst the UK’s major cities dominated the rest of the charts. Unsurprisingly, the top ten buy-to-let hotspots featured three London boroughs as well as Nottingham, Greater Manchester, Liverpool, Coventry and Southampton. Research into rental yields revealed that property investments in Nottingham had the second highest average net rental yields at 6.4%, with Westminster at 5.1% and Edinburgh at 4.9%. Trends analysed throughout the research process found that all urban areas featured in the top 10 benefitted from a substantial student and professional population, which helped to increase the demand for rental accommodation and boost rental prices.
As buy-to-let investors and landlords, it is important to consider house prices and mortgage costs, not just rental returns upon deciding where to invest your money. Four of the locations featured in Private Finance’s research (Nottingham, Greater Manchester, Liverpool and Coventry) have some of the lowest house prices in the UK, proving that property price isn’t always reflective of rental return and you don’t need to spend millions to enjoy a sizeable profit.
The current property market is prospering and continues to provide a range of opportunities for investors and landlords, with attractive rental returns coupled with declining buy-to-let mortgage rates. Based on a 75% buy-to-let loan against the average UK house price, the interest-only monthly repayments for a landlord have fallen from £733 to £334, a 54% decrease in the past 6 years.
Despite recent punishing tax changes the buy-to-let market remains strong with appealing rental incomes and record-low mortgage costs, offering lucrative opportunities for many. As ever, location is key and knowing the best place to invest will guarantee your success.