There are plenty of things you need to factor in before you embark on any UK property investment, and the first step is often choosing the best location.
Most investors make money through property in two ways: via monthly rental returns where the investment property is rented out, and through capital appreciation when the property is ultimately sold at a higher price than was paid. This is why both the rental market and house price trends should be taken into account before investing.
At the moment, the UK’s rental market is experiencing extremely high levels of demand for a number of reasons, and this has been the case for several years. What’s more, most experts predict that this high level of demand will continue for the foreseeable future, unless major changes take place in the market.
For those looking at their next UK property investment, this is important because it means rental prices are set to remain strong (rather than fall), buoying rental yields. Other things can affect it, too, such as void periods – the longer a property may be unfilled between tenancies, the lower your yields may be.
According to a recent report by Zoopla, the average gross rental yield in the UK is currently 5.6%. Of course, some areas have much higher average rental yields than others, which is worked out using the total property cost (including money spent on it) and monthly rental income over a 12-month period.
Best locations for UK property investment
Prospects for UK property investment have improved when looking at gross rental yields alone, as these have increased across all regions over the past year. This is due to the stabilisation of house prices alongside continually rising rents.
If you’re considering a UK property investment as a buy-to-let landlord, Zoopla’s research has revealed that the North East and the North West are the top regions when it comes to average yields. Landlords in the North East currently enjoy average rental yields of 7.65%, based on an average property value of £109,072, with rents at £695 per month.
This is closely followed by Scotland, where average gross yields are 7.48%, but in England the second highest yields can be found in the North West, at 6.66%.
Although London has long since been a particularly popular place for UK property investment, particularly among overseas investors, it actually has the lowest gross rental yields, says Zoopla, at 4.93%, and they have also risen the least over the past three months with a 0.1% increase.
Looking specifically at cities, Sunderland has the highest rental yields in the country at 8.96% for the North East, with Middlesbrough in the region also coming out well above average with 7.92%. For the North West, the top cities according to Zoopla were Burnley (8%), Blackburn (7.52%) and Liverpool (7.44%).
The outlook for UK property investment
Thanks to the ongoing resilience of the housing market, with a combination factors also continuing to keep demand exceptionally high in the rental market, the outlook for UK property investment has plenty of positive aspects – particularly for those who opt for a promising location.
According to Zoopla, new investment from private landlords is currently a fifth higher than it was last year, but there are still more than 15 enquiries for every home to rent, which is double pre-pandemic levels. This means rental homes are getting a huge amount of interest, creating a fast market for landlords and tenants.
The property portal expects gross rental yields to continue to increase over the course of 2024, which is expected to help buy-to-let landlords at least partially offset the rise in borrowing costs that has affected everyone in the housing market, as well as the UK property investment space.
Its current projection is that rents in the UK will rise by around 5% on average by the end of 2024, although as the current data (and research from many other sources)
The North East and North West regions of the UK are currently identified as the strongest areas for property investment. According to projections, rents in the UK are expected to rise by approximately 5% by the end of 2024. However, it is important to note that these figures may vary significantly depending on the specific location. Therefore, potential investors should carefully consider the data for each area rather than relying solely on UK or regional averages.
shows, this will vary significantly from location to location. Therefore, anyone looking into investing in property should take into account the figures for each area, rather than UK or regional averages as a whole.
If you’re considering investing in property in the UK, get in touch with BuyAssociation today to speak with one of our experienced property consultants about our range of current and upcoming opportunities.