Top buy-to-let locations revealed

Southampton takes the crown for the best location for buy-to-let, offering savvy landlords an impressive 7.82% rental yield.

The research, which was compiled by HSBC, found Blackpool was hot on the heels of Southampton, offering rental yields of 7.81%. Kingston upon Hull took third spot with 7.77%.

The rental yield is calculated as the percentage of the price of the house returned to an investor over a year's rent.

Southampton takes the top spot thanks to a combination of high monthly rents (averaging £901) and relatively low house prices, with the typical property coming in at £138,311.

HSBC says seaside towns, such as Brighton, Bournemouth and Eastbourne, scored highly thanks to holiday rentals and season work. Other cities to score in the top 10 included Liverpool, Slough and Coventry.

London boroughs were mid-table due to the high cost of housing: Southwark was top with an average property price of just over £400,000 and monthly rents of £2,058, creating a typical rental yield of 6.15%.

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Above average returns

Peter Dockar, head of mortgages at HSBC, said: "Buy to let remains a good investment for those looking for above average returns, with 23 of the top 50 areas offering yields above 5%, significantly more than is available from more traditional saving options.

"However, it is clear there is a fine line between a property in a desirable area, the rents that can be achieved and the returns that can be yielded so it is key landlords do their research as often the most popular locations may not offer the best return."

Your Comments

Yields on property rents as shown above seem not to include fees by estate agents plus insurances repairs and upkeep etc and I  assume tax must be paid. But the main attraction appears to be that the tenants are buying your houses for you if you have them on mortgages that is, in which case the 'yield' is only good provided property prices don't drop along with the rents.  Also as happened to a friend of mine not all tenants are good and her two rented out properties were badly treated and basically wrecked.  In an ideal world a good landlord gets a good tenant and bad one gets a bad one.

I currently rent a one bed flat that I own outright however my income tax bill is now very high, is it worth taking out a mortgage on this already let property just to reduce income tax by setting off, does the mortgage taken have to be spent on a second buy to let property, is this tax efficient as although it will reduce the tax bill the loan amount obviously has to be paid off but the interest will be paid by the tax man? Is this correct?

i have been a landlord now for over 20 yrs, it can work well but it is not a case of just sitting back and watching the money roll in, as some people seem to think, i buy run down properties,get in myself and renovate, no i am not a builder but there is a lot that can be done yourself if you are not affraid of hard work and getting your hands dirty. when properties are vacated it is me who goes in cleans up and repairs. simple realy work hard and it will work well, sit back and it will fail.