Rents in the The west of England are rising at the fastest rate, based on new data from Your Move – yet landlords with properties in northern areas of the country are experiencing the highest yields.
We reveal where in England and Wales rent prices have raised the most and in which areas landlords can get the best returns.
Rent prices in England and Wales
The average rent price for properties in Britain appears to have plateaued, according to the latest Your Move buy-to-let property index.
Across all regions, the typical monthly rent – adjusted to remove seasonal variations – now stands at lb861. This is just a 2% increase on last year.
Overall, the The west of England saw rents rise at the fastest rate every year, with a 3.3% from lb664 to lb686.
Property rentals remain the least expensive in the North East, and rent prices fell 1.6% year-on-year to lb535, down from lb544 the year prior.
Interestingly, the London rental marketplace is continuing to cool, using the average monthly rent falling 0.5% to lb1,271, down from lb1,277 last June.
The map below shows the typical the cost of rent for England and Wales in the last year.
Highest yielding areas for buy-to-let properties
As a buy-to-let investor, rents only tell part of the story. You also have to consider just how much properties cost to purchase in a particular region. The yield teaches you the rental income as a number of the buying costs.
In June 2022, landlords and real estate investors in northern parts of the nation continued to enjoy higher percentage yield returns than those within the south.
The biggest returns were observed in the North East of England, where the average property offered landlords a 5% return.
A similar story was seen in the North West and Wales, where landlords enjoyed strong returns of four.8% and 4.6% respectively.
Yields in London were slightly more lacklustre at 3.16% – well below the national average rental yield return of 4.4%. Given the cost of rent are much higher within the capital, however, the absolute returns in London above those observed in northern regions.
The map below shows the typical rental yields for Britain.
Capital growth on buy-to-let
When taking a look at buy-to-let properties, another key factor to consider is capital growth, because this will affect how much profit you can make when selling your property in the long run.
Interestingly, capital growth on properties in the North East has outpaced those who work in London year on year.
The average property price within the North East stands at lb124,381, up lb2,083 from lb122,298 in March 2022, based on the Land Registry House Price Index.
Property prices in London, which are lb471,944 on average, are just up lb202 from lb471,742 over the same period.
Don’t forget to look beyond the average price for a region, however, and consider the sales history of similar properties from our area or even the same street.
While past performance is no guarantee of future growth, you can get an idea of how property values on the bottom have previously changed.
Finding the best buy-to-let mortgage deal
It’s necessary to seek information before taking out a buy-to-let mortgage.
You need to be confident that your rental income is going to be enough to pay for your mortgage and any other expenses comfortably, including periods when your property is standing empty.
As an over-all rule, lenders will need evidence that your rent covers a minimum of 125% of your mortgage repayments.
Buy-to-let mortgage rates could be greater than residential mortgages, because of additional risks, so if you’re looking to become a landlord, you can often expect to pay 1% to 2% more in interest.
There are, however, lots of competitive rates on the market and you could still get a great deal.
Having a larger deposit for a property means that you’ll be capable of getting a much better rate of interest. It’s typical for prospective landlords to have a deposit of at least 25%, although a restricted selection of lenders will help you to get a buy-to-let mortgage of 20%.
Getting impartial advice from the mortgage broker can help you get the best buy-to-let lenders for the circumstances making a financial plan, too.