The north of England has developed a reputation for being a buy-to-let hotspot, according to sources. With high rental yields and characteristically lower house prices than the south of the country, it’s no wonder that many northern cities have been listed as ideal locations for buy-to-let investments. According to research, dynamic employment opportunities and large student populations also contribute to the healthy yields investors can experience in the north.
However, we believe the south might not be that far behind. We decided to compare the capital growth and rental yield on offer in the north and the south of the country. The tables below indicate the average capital growth vs. rental yield in both southern and northern cities.
Northern Cities
|
Northern Region |
Capital Growth | Rental Yield |
| Newcastle Upon Tyne | 1.53% | 4.74% |
| York | 4.38% | 4.72% |
| Leeds | 7.46% | 4.74% |
| Manchester | 6.60% | 6.15% |
| Liverpool | 5.65% | 5.50% |
| Sheffield | 3.96% | 5.17% |
| Nottingham | 7.38% | 4.93% |
| Stoke on Trent | 3.50% | 4.48% |
| Chester | 1.06% | 4.66% |
| Warrington | -1.22% | 4.35% |
| Doncaster | 3.63% | 5.22% |
| Hull | 5.61% | 4.64% |
| Preston | 3.39% | 4.46% |
| Lancaster | 3.02% | 4.46% |
| Average | 4.00% | 4.87% |
Source: Lendinvest (1)
Southern Cities
| Southern Region | Capital Growth | Rental Yield |
| Canterbury | 9.74% | 4.44% |
| Tunbridge Wells | 12.94% | 3.87% |
| Brighton | 8.75% | 4.28% |
| Southampton | 5.47% | 4.08% |
| Dartford | 17.75% | 4.47% |
| Reading | 13.07% | 3.97% |
| Bristol | 11.24% | 4.59% |
| Bath | 11.54% | 4.27% |
| Exeter | 4.66% | 3.90% |
| Cambridge | 5.12% | 3.64% |
| Oxford | 10.29% | 4.12% |
| Chelmsford | 13.10% | 4.16% |
| Enfield | 16.97% | 4.60% |
| Luton | 15.19% | 4.73% |
| Swindon | 9% | 4.16% |
| Average | 10.99% | 4.22% |
Source: Lendinvest (1)
What does the data show?
Strong rental yield in the north:
- Based on the data shown, the north offers a strong rental yield, and, considering average asking prices are lower, you could potentially receive a higher total yield on your investment.
The divide is narrowing:
- However, LendInvest’s February figures indicate that the potential rental yields available in the north and south aren’t as different as you might expect. The divide is narrowing. Based on the data provided above, the average rental yield in the south is 4.22%, and the average yield in the north is 4.87% - just 0.65% higher.
- This is supported by research conducted by Zoopla, which revealed the north-south rental gap was narrowing. The article, published in October 2016, explained that rent hikes are increasing in the north of the country, but cooling in the south. In fact, “rents in northern cities increased at three times the rate of those in southern ones during the past year, recording average hikes of 6.4%, compared with rises of just 1.8%.” (2)
Strong capital growth in the south:
- However, the average capital growth in the southern areas detailed below is 10.99%, which is 6.99% higher than those detailed in the north. For investors more interested in capital growth, the south of the country might have a lot more to offer.
It seems the south is catching up to the potential rental yields on offer in the north. However, the strong capital growth on offer in the south, according to this data, is leagues ahead of the north.
Written by Jenna Kamal
Sources
- https://www.lendinvest.com/media-centre-buy-to-let-index/
- http://www.zoopla.co.uk/discover/property-news/north-south-rent-gap-narrows/#rqsy3RL21KUhYMzp.97
Disclaimer and Legals
Property Moose does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Please remember that property prices can go down as well as up and that all figures, rates and yields are projections only and should not be relied on. If in doubt, please seek the advice of a financial adviser. Your capital is at risk if you invest. This post has been approved as a financial promotion by Resolution Compliance Limited.
Property Moose is a trading name of Crowd Fin Limited which is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (no: 574048).
