Liverpool has been named as the number one buy to let property hotspot for investment in the UK.
Analysis data revealed by Private Finance crowned Liverpool as the top location for buy to let property investment. The city was found to offer rental yields of around 8 per cent after mortgage costs are taken into account.
Low average property purchase prices of £122,283 coupled with strong average rents of £1,021 combined to offer the high rental yield in Liverpool when compared to other areas.
Nottingham came in a fair way behind in second place, with an annual rental yield of 5.6 per cent. Third spot was grabbed by Coventry, close behind Nottingham with average yields of 5.4 per cent.
Greater Manchester at 4.3 per cent and Portsmouth at 4.2 per cent made up the top five places to invest in buy to let.
The strong yields offered in these cities are thought to be influenced by strong university presence, resulting in large student rental demand.
Unsurprisingly, no London areas were in the top ten, with only three southern locations featuring. Portsmouth, Bournemouth and Southampton again have strong student demand, as well as potential holiday lets.
Director of Private Finance, Shaun Church, commented: ‘It’s not only the residential property market that’s all about location, location, location. Investors should look for areas with strong rental demand. Larger cities and university towns generally have better performing rental markets. This will help to avoid lengthy void periods that can damage landlords’ profitability.
‘Investors may also want to stay away from areas with very high house prices. Although these locations can provide high rental income, a large initial investment can prevent investors from achieving good returns.
‘When purchasing with a mortgage, landlords should keep in mind that the larger the loan, the higher their mortgage costs will be.
‘Now that tax relief on mortgage interest is being restricted, keeping mortgage costs down is particularly important. The good news is all landlords are benefiting from ultra-low mortgage rates.’