The number one buy-to-let (BTL) hotspot next year will be the North West, according to new findings from SevenCapital and Zoopla.
The region offers the UK’s best yields, closely followed by Yorkshire and the Humber and, in third place, Scotland.
The research revealed the top yields expected for 2022 across the UK, with the North West providing the best rental yield at an average of 4.41% across the UK. This is being driven by ‘exceptional regeneration projects’ in the Northern Powerhouse towns and cities alongside the London ‘exodus’ to the north, accelerated by Covid-19, where prices are less expensive.
Increased investment in the north has also benefitted Yorkshire and the Humber, which delivers average rental yields of 4.33% and a decent average rent of £697.
Scotland, meanwhile, has recorded healthy yields of 4.11%, with an average rent of £687 – significantly higher than London, with the capital reaching yields of just 2.9%.
During 2022, it’s expected that the Midlands and the North of England will show the strongest price growth, mainly driven by their greater capacity for growth - building on their market-leading performance for BTL investors.
Despite, or perhaps because of, the pandemic, UK house prices have continued to grow strongly throughout this year, increasing by 5.6% in the first six months of 2021, driven by elevated levels of demand – in part due to the stamp duty holiday and also because of changed priorities for many. It’s expected that, by the end of the year, the UK will see prices rise by a total of 9%.
Property consultancy Savills believes that while transactions and price growth will continue in 2022, it will be tempered by the exceptional growth we’ve seen this year, even more so if interest rates start to rise sooner than expected.
Toks Adebiyi, founder and chief executive of property management company Clooper, said: “Rental yields can change from postcode to postcode, so it is important that landlords conduct thorough research into potential investment outside their current property portfolio locations, to ensure they achieve maximum yields.”
He added: “For example, in Manchester, Leeds and Birmingham, certain postcodes are hitting yields of between 6-12%, as property prices are considerably lower than the South East. Currently, the average UK rental yield is sitting at 3.63%, so anything over that amount can be considered a high rental yield area.”
He believes landlords considering expanding their portfolio into 2022 have the opportunity to acquire highly profitable properties next year, despite looming interest rate rises and potential issues with finance. The good news, he adds, is that there is an ever-increasing demand for rental properties across the UK.
“Recent research shows that almost 40% of landlords have reported increasing tenant demand throughout the past three months - the highest level since 2016,” he continued.
“A further 18.2% said this has grown significantly, while 20.3% stated they have witnessed slight increases. This is according to a survey of more than 750 landlords carried out by BVA BDRC on behalf of Paragon Bank.”
He went on: “We want to support landlords to find quality tenants faster and cheaper, removing the risk of non-performance. Hence, we have developed an innovative new platform, Clooper, which can be used by landlords who are seeking new tenants and are happy for their properties to be listed on Clooper, Rightmove, Zoopla, Prime Location and promoted via social platforms.”