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Top buy-to-let UK hotspots 2013

As the UK buy-to-let mortgage market continues to relax and traditional savings rates fall drastically, many people are considering buying and renting property as a scalable investment strategy. If you are one of those looking to enter the buy-to-let market, you might be wondering about prevailing market conditions and which are the top buy-to-let UK hotspots that offer the best rental yield.

Buy-to-let market conditions

According to the latest Census that analyses data between 2001 and 2011, there was a rise in the number of households renting from a letting agency or private landlord. Approximately 3.6 million households rented in this manner, which represents a rise in the share of households renting from a letting agency or private landlord of 9% in 2001 to 15% in 2011.

The Census report also indicates that if rental property prices continue to rise at the same pace as they have over the last few months in 2013, the average investor in the UK can expect to make a total annual return of 8.9% over the next 12 months. This translates to an equivalent of £14,735 per property.

Buy-to-let hotspots

Investors are advised to look at Kent, Birmingham, and Merseyside postcodes and shun the bumper rents of London for top rental yields, according to data by Move with US. The Move with US data that reveals top buy-to-let UK hotspots looks at rental yields as a percentage of a property's purchase price.

Landlords can garner yields of 10.5% and 9.6% respectively from TN28 and L14 postcodes, while the B7 postcode can offer a yield of 10.6% gross rental yield. Greater London currently gives an average rental yield of less than 4%.

Now for those unsure what a gross rental yield is, it is defined as the median annual rent divided by median asking price.

Highest yielding postal districts 2013

Here’s a breakdown of the top ten buy-to-let UK hotspots, which are represented as highest yielding postal districts across England and Wales.

Postal district

Gross rental yield

B7 Birmingham

10.6%

TN28 Kent

10.5%

L14 Merseyside

9.6%

GU6 Surrey

9.5%

TS1 Middlesbrough

9.2%

B35 Birmingham

9.2%

L4 Liverpool

9.1%

RH4 Surrey

9.1%

B18 Birmingham

8.7%

EN8 Hertfordshire

8.7%

The data in the table was collected for two-bedroom properties that were advertised online for rent or sale during the first six months of 2013.

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