Best buy-to-let locations for overall return revealed
Glasgow may be home to the highest average rental yield currently, but the best combination of yield and price growth in the UK is in Rossendale, according to Howsy.
The lettings management platform found that the Lancashire borough has a marginally below-average yield of 4%, but with property values increasing by 18% in the last year, it’s home to the highest combination of rental income and house price growth.
The Wyre Forest is in second place, with a below-average rental yield of 3%, but prices up 17% in the last year, making it an excellent all-round investment.
Pendle is home to an above-average rental yield of 6% with price growth at 13% annually, while Hackney offers current rental returns of 3% with property values up 15% annually.
Gravesham, Hyndburn, Kensington and Chelsea, Westminster, Dundee and Leicester also rank high where the combination of rental yields and house price appreciation is concerned.
Across the UK, house prices are up just 2% annually while yields currently sit at 5%.
However, regionally London is home to the most favourable combination with an increase of 5% in property values, while the average buy-to-let returns a 4% yield.
The North West and South West also offer a similar combination of 3% and 4% in house price growth and 5% and 4% in rental yields respectively.
Founder and CEO of Howsy, Calum Brannan, said: “As a landlord, it can be easy to get bogged down in the almost immediate financial viability of a buy-to-let investment. Understandable given the unpredictability of house price growth in the long-term and so the rental yield available is often the only current data available during the decision-making process.
“However, there are plenty of areas across the UK that might not present the best yields nationally but have delivered a substantially larger return where house price growth is concerned.
“As the figures show, this isn’t restricted to one area of the market, and this is certainly something to be considered when investing. For the majority of landlords, their portfolio is their pension pot and so while ongoing rental income is essential, keeping an eye on cashing out and the overall value of your portfolio when you do is also advised.”