Rental Yields – Chart of the top 50 areas in England and Wales

by Property 118

10:47 AM, 29th May 2014
About 5 years ago

Rental Yields – Chart of the top 50 areas in England and Wales

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Rental Yields – Chart of the top 50 areas in England and Wales

HSBC has released a report showing the average rental yields for the top Buy to Let hotspots of England and Wales based on data from the Office of National Statistics (ONS) and Land Registry.

This information broken down to specific areas is valuable for Landlords looking for future property investments, giving a base line picture of what rental yields and incomes are achievable.

The figures show that in some areas private landlords already own more than 1 in 4 properties of the housing stock with Southampton being the highest yielding area on average.

The Top 50 Buy to Let Hotspots by Rental Yield are:

Location Percentage of Rental Housing Stock Average House Price Average Rent (Monthly) Average Rent (Annual) Rental Yield (gross)
Southampton 23.42% £138,311 £901 £10,812 7.82%
Blackpool 24.16% £75,943 £494 £5,928 7.81%
Kingston upon Hull 19.02% £69,519 £450 5400 7.77%
Manchester 26.85% £102,631 £650 £7,800 7.60%
Nottingham 21.64% £83,313 £524 6288 7.55%
Coventry 19.02% £104,970 £624 7488 7.13%
Slough 23.07% £171,581 £975 £11,700 6.82%
Oxford 26.11% £244,893 £1,375 £16,500 6.74%
Liverpool 21.75% £91,012 £498 5976 6.57%
Portsmouth 22.28% £141,971 £775 9300 6.55%
Cardiff 20.32% £140,882 £750 9000 6.39%
Cambridge 23.91% £179,699 £949 £11,388 6.34%
Southwark 22.22% £401,405 £2,058 24696 6.15%
Luton 21.27% £127,473 £650 7800 6.12%
Newham 32.62% £229,141 £1,126 £13,512 5.90%
Leicester 21.28% £112,226 £550 6600 5.88%
Bournemouth 28.21% £170,493 £825 £9,900 5.81%
Enfield 21.18% £261,163 £1,200 14400 5.51%
Brighton and Hove 28.04% £229,622 £1,049 £12,588 5.48%
Brent 28.82% £337,723 £1,517 £18,204 5.39%
Forest Heath 21.80% £179,699 £795 9540 5.31%
Torbay 21.43% £139,168 £598 7176 5.16%
Southend-on-Sea 20.72% £152,171 £650 7800 5.13%
Watford 18.89% £240,239 £997 11964 4.98%
Bristol, City of 22.11% £169,425 £695 8340 4.92%
Kingston upon Thames 21.04% £333,122 £1,363 16356 4.91%
Reading 24.68% £196,309 £795 £9,540 4.86%
Hounslow 22.23% £285,927 £1,148 13776 4.82%
Wandsworth 30.02% £428,987 £1,694 £20,328 4.74%
Lewisham 22.97% £283,031 £1,101 13212 4.67%
Shepway 20.17% £181,399 £695 8340 4.60%
Tower Hamlets 30.84% £364,296 £1,387 £16,644 4.57%
Eastbourne 21.65% £177,408 £675 8100 4.57%
Harrow 20.37% £306,381 £1,148 13776 4.50%
Croydon 19.83% £254,591 £949 11388 4.47%
Exeter 19.56% £187,680 £693 8316 4.43%
Isles of Scilly 20.63% £180,227 £654 7848 4.35%
Lincoln 19.36% £119,076 £429 5148 4.32%
Redbridge 21.63% £292,459 £1,049 12588 4.30%
Cheltenham 20.15% £170,573 £598 7176 4.21%
Ipswich 18.75% £153,163 £524 6288 4.11%
Richmond upon Thames 20.55% £485,496 £1,647 19764 4.07%
Westminster 37.56% £767,112 £2,578 £30,936 4.03%
Norwich 20.10% £179,699 £598 7176 3.99%
Camden 30.46% £646,043 £2,145 £25,740 3.98%
Hastings 27.19% £177,408 £550 £6,600 3.72%
Haringey 30.33% £372,278 £1,148 £13,776 3.70%
Thanet 21.96% £181,399 £524 6288 3.47%
Hammersmith and Fulham 30.05% £593,787 £1,690 £20,280 3.42%
Kensington and Chelsea 33.97% £1,090,943 £3,033 £36,396 3.34%

Broken down by the top 10 London hotspots:

Location Average Property Price Average Rent (Monthly) Rental Yield (gross)
1. Southwark £401,405 £2,058 6.15%
2. Newham £229,141 £1,126 5.90%
3. Enfield £261,163 £1,200 5.51%
4. Brent £337,723 £1,517 5.39%
5. Kingston upon Thames £333,122 £1,363 4.91%
6. Hounslow £285,927 £1,148 4.82%
7. Wandsworth £428,987 £1,694 4.74%
8. Lewisham £283,031 £1,101 4.67%
9. Tower Hamlets £364,296 £1,387 4.57%
10. Harrow £306,381 £1,148 4.50%

HSBC head of mortgages Peter Dockar said “house prices in the top-yielding locations, while still out of reach among many first time buyers are relatively affordable for landlords investing in property and the demand from young professionals has pushed up rents and driven up the returns. London is often seen as the haven of property investment with many believing the streets are paved with gold. However, while the highest rents in the country are an attractive draw for landlords, high house prices in the capital squeeze yields and limit the returns available. As a result returns can often be far more attractive in other areas so it certainly pays for landlords to do their research.”rental yields



Comments

Neil Patterson

10:50 AM, 29th May 2014
About 5 years ago

An excellent reference guide for me when talking to readers about Buy to Let mortgages

Plus this is useful information to combine with our property research tool

http://www.property118.com/property-search-tool/

11:03 AM, 29th May 2014
About 5 years ago

Does anyone have a view on how "average house price" against "average rent" produces any kind of valuable metric?

I am struggling to see it.

If the area has a wide range of property prices, this "average yield" becomes less of an indicator imho.

Also, I assume they are based on private rents, not LHA rents? Therefore, they are not representative of an area where there is a high proportion of LHA tenants.

Surely tenant demand is the first most important consideration of any BTL investor?

I would not recommend newbies using these tables as any kind of guide as the value in them is questionable.

My view is that, in property, the devil is in the detail, not relying on averages or being directed to so-called "hotspots".

Interested to hear what others think. 🙂

Some One

11:04 AM, 29th May 2014
About 5 years ago

It's interesting to give a rough indiciation, but it's slightly[1] silly comparing average rental price with average house price given the average rental property will be worth considerably less than the average house.

It would also be interesting to see their definition of a 'hot spot' as this seems very southern biased

[1] Without bothering to look I'm not sure how easy it would be to come up with an average price of rented property - I guess Nationwide and Lloyds could have a stab at it based on their mortgage books.

Farah Damji

11:04 AM, 29th May 2014
About 5 years ago

Yields.
Not yeilds.

Neil Patterson

11:08 AM, 29th May 2014
About 5 years ago

Reply to the comment left by "Farah Damji" at "29/05/2014 - 11:04":

Oooops missed one

Mark Crampton Smith

11:13 AM, 29th May 2014
About 5 years ago

Agreed....... A very useful tool. However, here in Oxford, we have seen property values "leap" in the last 12 months by as much as 21% in certain parts of the city, and we have seen a number of flats have a 50% hike in value over an eighteen month period. It is certainly the case that in parts of prime central London values are also rising by over 10%pa and this has driven investment to a greater extent than yield. It is no longer the case that yield is the primary driver for investment in key streets and neighbourhoods.
It would be useful to have an extension of the table showing capital value shifts to give a more clear picture of real return.

Neil Patterson

11:21 AM, 29th May 2014
About 5 years ago

The figures are a starting point for a basic ratio showing cost of purchase (investment) against income and I am guessing skewed towards your standard residential single AST BTL.

EG I knew Manchester and Southampton were good for yield.

These figures are not the be all and end all but can certainly assist less experienced investors to know if what they are looking at is even in the ball park.

Mark Alexander

11:21 AM, 29th May 2014
About 5 years ago

I agree with other comments, I have yet to find the "average" property, they are all so different. Lies, damn lies and stats comes to mind when reading this article.

Where did the data come from to calculate average rents one has to wonder? I'm not aware of a central register for this, is anybody?

Combining two averages is virtually meaningless, other than for PR purposes for HSBC Mortgages of course 😉

Will the average house (if such a think exists) actually provide an average rent? I doubt it!
.

11:27 AM, 29th May 2014
About 5 years ago

This article has got significant media attention across the board because of the "eyeball grabbing" headline - nothing wrong in that either.

The good thing is that discussions such as this one allow a "community generated" scrutinisation of the information to understand if it holds any real value.

Take Brighton - its the most unaffordable place in the U.K. for first time buyers.

Brighton and Hove have also issued over 1500 HMO licences in the past two years.

These facts affect the market dramatically.

So, you buy an investment property, but who are you going to exit to, bearing in mind that investors will look for big discounts?

I always try to buy a property that has owner-occupier appeal as well as tenant appeal.

In property, I have found that it's always best to start with the end in mind and work back from there.

Neil Patterson

11:28 AM, 29th May 2014
About 5 years ago

Reply to the comment left by "Mark Alexander" at "29/05/2014 - 11:21":

I agree it was done by HSBC for PR purposes but why else would they have done it.

I have looked at the ONS data before on this subject and decided it would not be worth losing a week of my life on it so just glad someone else has spent the time. Phew!:)

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