LONDON, UNITED KINGDOM -- (Marketwired) -- 04/20/13 -- Rental yields of 7.82% and private rental accommodation making up almost a quarter of its housing stock make Southampton the best place in England and Wales for buy to let (BTL) investors according to research from HSBC.
Of the fifty towns and cities with the highest concentration of private rental housing stock, Southampton topped the list for rental yield due to relatively affordable housing and an average rent of GBP 901 per month. The relatively inexpensive property prices in Blackpool, Hull Manchester and Nottingham mean that these four Northern areas make up the rest of the top 5, offering strong returns for BTL investors with yields of 7.81%, 7.77%, 7.60% and 7.55% respectively. In sixth place, Coventry is the only other city offering returns above seven per cent with a yield of 7.13%.
Despite the high proportion of private rentals in the capital, London does not score highly in terms of rental yields due to the comparably high property prices. The top performing borough in the capital, Southwark, is 13th overall while the affluent London boroughs of Hammersmith and Fulham and Kensington and Chelsea are ranked in the bottom two places in the top 50 due to the high initial outlay to purchase a property, generating returns of just 3.42% and 3.34% respectively.
Table 1: Top 10 BTL Hotspots by Rental Yield
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Average Average Rent Rental Yield
Location Property Price (Monthly) (gross)
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Southampton GBP 138,311 GBP 901 7.82%
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Blackpool GBP 75,943 GBP 494 7.81%
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Kingston upon Hull GBP 69,519 GBP 450 7.77%
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Manchester GBP 102,631 GBP 650 7.60%
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Nottingham GBP 83,313 GBP 524 7.55%
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Coventry GBP 104,970 GBP 624 7.13%
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Slough GBP 171,581 GBP 975 6.82%
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Oxford GBP 244,893 GBP 1,375 6.74%
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Liverpool GBP 91,012 GBP 498 6.57%
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Portsmouth GBP 141,971 GBP 775 6.55%
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Seaside Towns
Due to holiday rentals and seasonal work, many seaside towns are BTL hotspots with 17 of the top 50 areas found on the coast. Blackpool tops the seaside town list with a yield of 7.81%. The rest of the top ten is made up of southern seaside areas, including holiday destinations such as Brighton, Bournemouth and Eastbourne. While property prices tend to be higher in these areas, rents are also above average, meaning yields are strong for investors.
Table 2: Top 10 Seaside BTL Hotspots by Rental Yield
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Average Average Rent Rental Yield
Location Property Price (Monthly) (gross)
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Blackpool GBP 75,943 GBP 494 7.81%
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Bournemouth GBP 170,493 GBP 825 5.81%
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Brighton and Hove GBP 229,622 GBP 1,049 5.48%
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Torbay GBP 139,168 GBP 598 5.16%
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Southend-on-Sea GBP 152,171 GBP 650 5.13%
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Shepway GBP 181,399 GBP 695 4.60%
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Eastbourne GBP 177,408 GBP 675 4.57%
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Isles of Scilly GBP 180,227 GBP 654 4.35%
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Hastings GBP 177,408 GBP 550 3.72%
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Thanet GBP 181,399 GBP 524 3.47%
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London
Due to London's high property prices, its rental yields are relatively modest on the whole. Southwark tops the list of boroughs with a yield of 6.15%. Areas in Outer London offer some of the strongest yields in the capital including Newham, Enfield, Brent and Kingston upon Thames. Just three of the top ten areas are in inner London and each of these is in the East of the city, traditionally the more affordable end of the capital.
Table 3: Top 10 London BTL Hotspots by Rental Yield
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Average Average Rent Rental Yield
Location Property Price (Monthly) (gross)
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Southwark GBP 401,405 GBP 2,058 6.15%
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Newham GBP 229,141 GBP 1,126 5.90%
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Enfield GBP 261,163 GBP 1,200 5.51%
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Brent GBP 337,723 GBP 1,517 5.39%
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Kingston upon Thames GBP 333,122 GBP 1,363 4.91%
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Hounslow GBP 285,927 GBP 1,148 4.82%
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Wandsworth GBP 428,987 GBP 1,694 4.74%
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Lewisham GBP 283,031 GBP 1,101 4.67%
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Tower Hamlets GBP 364,296 GBP 1,387 4.57%
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Harrow GBP 306,381 GBP 1,148 4.50%
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Peter Dockar, head of mortgages at HSBC commented, "Buy to let remains a good investment for those looking for above average returns. Twenty-three of the top 50 areas offer yields above 5%, significantly more than is available from more traditional savings options.
"However, it is clear there is a fine line between a property in a desirable area, the rents that can be achieved and the returns that can be yielded so it is key landlords do their research as often the most popular locations may not offer the best return."
HSBC offers a range of competitive Buy to let mortgages for its current account customers. For more information visit hsbc.co.uk/buy-to-let-mortgages.
HSBC Bank plc: HSBC serves 16.1 million customers in the UK and employs approximately 52,000 people. In the UK, HSBC offers a complete range of personal, premier and private banking services including bank accounts and mortgages. It also provides commercial banking for small to medium businesses and corporate and institutional banking services. HSBC Bank plc is a wholly owned subsidiary of HSBC Holdings plc.
The HSBC Group: HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 7,500 offices in over 80 countries and territories in Europe, the Asia-Pacific region, North and Latin America, and the Middle East and Africa. With assets of US$2,556bn at 31 December 2011, HSBC is one of the world's largest banking and financial services organisations.
Contacts:
HSBC
Suman Hughes
+44 (0) 20 7992 2748
suman.hughes@hsbc.com
