The northwest of England tops the ranking as the best place to invest for a high annual rental yield, while the southeast is benefiting from the massive increase in house prices.
Although George Osborne announced an additional 3% stamp fee to be charged on other property purchases in his 2016 budget, investing in real estate can be profitable, and here are the most lucrative areas of investment.
The North West of England tops the list as the most lucrative real estate investment area for high rental yields; With four tenants competing for each property, there is no shortage of demand.
On the contrary, those who have invested in the South East and London will benefit from the rise in house prices.
Investing in real estate in the North West of England to achieve a high rental yield
Accurately, Manchester is surveying the best place to invest if you want a high rental yield. The yield is calculated, taking into account the average monthly rent and is applied as a percentage of the market price of the property. The average rental yield in Manchester was 6.02%, and Liverpool came in second. Full list below:
- Manchester 6.02%
- Liverpool 5.16%
- Cardiff 5.10%
- Coventry 5.02%
- Oldham 4.98%
- Sunderland 4.97%
- Lawton 4.91%
- Southend-on-Sea 4.87%
- London external 4.86%
- Rochester / Midway 4.79%
Manchester has been chosen as the best place to invest in real estate.
Manchester tops the list as the best place to invest for a high rental yield. Investors can not only achieve a high rental yield, but there is also a sizeable rental sector. 26.85% of the residential shares come from the private sector, which is higher than the national average of 18% and assures investors that there will be strong demand for real estate. Manchester is also home to 60% of those over 25-29 years of age (those who are likely to rent) elsewhere in the UK.
The best northern cities to invest in real estate outside Manchester
Liverpool is second on the list of the best places to invest in real estate for high rental yields. Liverpool is undergoing many renovation plans that focus on Liverpool docks and residences, which, when completed, will only increase house prices in the area as they increase interest. The Liverpool postal code L1, in particular, is on the rise and remains affordable for everyone, but after a 41.2% increase in house prices.
A large number of students in Liverpool means that there are still housing requirements, which, combined with lower house prices and higher rental values, allows investors to maximize their returns.
Investments in student accommodation in Liverpool, such as the Pembroke studios, are particularly attractive, guaranteeing immediate income, no risk of development, and 8% of net rental income secured for five years. The proximity of the event to many universities, including Liverpool John Morse and the University of Liverpool, only reinforces its attractiveness for the 50,000 students of Liverpool.
Sheffield is also expected to experience one of the highest rental growth rates in the next few years. This may be due in part to a lack of high-quality housing in the city, but the city has also been designated as the second “north-north force”; Plan to increase investment and the delegation of powers to northern cities like Hull, Manchester, and Sheffield. Traditionally a steel city, Sheffield has turned to technology and is now the ninth-largest technology center in the country. London and Cambridge are other tech cities, but the cost of living in both is getting out of reach for most people, so Sheffield is seen as a suitable alternative for many.
The growth of Sheffield makes it a sustainable city for real estate investment. Although Sheffield has not officially made the top ten places to invest in UK real estate, the postcode S1 gives some of the highest total returns in the whole of the UK. Investors can buy property in postal code S1 for less than £ 70,000 and get a total return of 11%. This, coupled with the city’s growing technology industry, means that the demand for housing can only increase.
Invest in real estate in Cardiff and Coventry to get excellent rental returns
Cities like Cardiff and Coventry also show excellent rental returns, due to the relatively low house prices. In particular, Cardiff recorded a 4.4% growth in employment in financial and commercial services, outpacing the rest of Wales and the UK as a whole. These improved economic conditions in Cardiff mean that many expect an increase in demand for rental properties in the area. Since companies and investors ultimately see the benefits in cities other than London, it’s no surprise that real estate in these areas is getting more and more desirable.
Investing in real estate in the South East of England for high capital gains
Southeast leads the way in capital gains, with real estate investments in central London yielding an annual return of 7.9% and Cambridge properties generating 5.99%. In terms of rental returns, compared to the North, the South East is performing poorly, and nine of the ten worst-performing postal codes are based in the South East and London. This is mainly due to higher house prices, which is, of course, suitable for generating high capital gains, but negatively affecting rental returns.
Where should investors buy real estate?
Investors may find it easier and safer to invest in the north where house prices are relatively low, rather than risk real estate investments in the southeast, where house prices are high. Although real estate in London and the South East has a much higher annual return, many investors find that they do not want to invest much money in the property because the risk is much higher. To achieve a stable income with less risk, we recommend that you consider places like Manchester, Liverpool, and Sheffield to invest in real estate. The advantage of investing in Manchester and Liverpool, in particular, is that even if real estate prices are currently low, they are likely to see the most robust growth in house prices as graduates decide to stay after school finishes. As mentioned earlier, the L1 Postal Code in Liverpool is home to some of the most significant house price increases in the country, registering a 41.2% growth in the past year alone. The average real estate prices in the region increased from £ 85,000 between December 2011 and November 2014 to £ 120,000 for the year to November 2015. Manchester, Liverpool, and Sheffield are still affordable, but we recommend the early investment to take advantage of the expected rise in house prices.