Property investment can be a very lucrative endeavour for investors and landlords, and new research from the estate agency, Coulters, reveals the towns and cities with the best and worst return on investment.
Coulters are an Edinburgh based agency and conducted their research by analysing the data of average house prices versus average rental prices to find out which cities offer the best return on investment (ROI).
How Coulters worked out the ROI for landlords
Coulters took the average house price in each city, figured out the mortgage repayments based on a 35-year term, 20% deposit, and 3% interest rate, and used this data to determine the annual profits. Coulters converted these figures into a percentage of the overall cost of a house to give the ROI.
Top 10 UK cities with the best ROI for landlords
Coventry is ranked in second place and offers an average ROI of 2.74% followed by Scottish city Glasgow with an average ROI of 2.67%. Two other areas in Scotland are in the top ten with Dundee fifth with an ROI of 2.47% and Paisley seventh with an ROI of 2.12%.
The Lancashire city of Preston tops the list and offers the best ROI for landlords. The average Preston property is sold for £176,378 and the average rental price is £981 pcm and gives landlords a profit of £438 per month and £5,256 per year, giving an ROI of 2.98%.
Top 10 UK cities with the worst ROI for landlords
The worst city for landlords when it comes to ROI is Warrington as the average house is £254,189 but the average rental price is just £566 pcm and an ROI of -1.02%.
Warrington’s relatively cheap rents make it an ideal choice for renters but a less lucrative city for landlords. Cambridge ranks second with an ROI of -0.86% and Crawley comes in at third place with an ROI of -0.50%.
Is it better to invest in Scotland or England?
According to Coulters' research, there is a considerable ROI difference between England and Scotland. Coulters' data shows the average annual profit for a Scottish landlord would be £1,909 with an average ROI of 1.06%. Whereas it might be harder for English landlords to make a profit, with an average loss of £227 per month and an average ROI of -0.06%.
You can view Coulters' full research, including the top 50 best towns and cities to invest in, here.