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Top 10 buy to let hot spots revealed

2 July 2014

Buy to let hot spotsSouthampton is the buy to let hot spot with the best yields for investors, according to a survey by HSBC Bank.

The south coast city offers landlords returns on investment of 8.73% - retaining the property investment crown for a second successive year.

The highest yields available in London are found in the Olympic borough of Newham at 6%

Rental returns are growing fastest year-on-year in Reading, Berkshire (12.8%) and Brighton, West Sussex (12.6%).

In Southampton, landlords can buy cheap homes and benefit from a strong rental demand driven by seasonal workers and students.

Peter Dockar, head of mortgages at HSBC, said: “Landlords are reaping the benefit as young professionals say goodbye to London in favour of more affordable commuter towns. Despite the inevitable increase in commuter costs, many still feel the move is worthwhile to save a deposit to buy their own home.

“House prices in these 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.”

Most of the cities in the top 10 placings have a strong tenant demand from students – except Blackpool which is a magnet for seasonal workers.
 

Rank 2014

Location

Rank 2013

% of Housing Stock Privately Rented

Average House Price

Average Rent (Monthly)

Average Rent (Annual)

Rental Yield 2014 (gross)

% Year on Year Yield Growth

1

Southampton

1

23.42%

£143,011

£1,040

£12,480

8.73%

11.6%

2

Manchester

4

26.85%

£104,244

£692

£8,316

7.98%

5.0%

3

Nottingham

5

21.64%

£86,000

£550

£6,600

7.67%

1.7%

4

Blackpool

2

24.16%

£77,899

£495

£5,940

7.63%

-2.3%

5

Kingston upon Hull

3

19.02%

£68,243

£425

£5,100

7.47%

-3.8%

6

Coventry

6

19.02%

£110,029

£650

£7,800

7.09%

-0.6%

7

Oxford

8

26.11%

£254,514

£1,489

£17,868

7.02%

4.2%

8

Portsmouth

10

22.28%

£146,709

£795

£9,540

6.50%

-0.7%

9

Liverpool

9

21.75%

£91,175

£494

£5,928

6.50%

-1.0%

10

Cambridge

13

23.91%

£185,414

£1,001

£12,012

6.48%

2.2%


Source: HSBC