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Where do you think would be the best region in the UK to be a landlord? If you thought London, you’re not alone. This tends to be the area that people assume is the most profitable, largely thanks to the sky-high rents that can be charged, but research has shown that this actually isn’t the case at all.

A report published by BM Solutions earlier this week found that the capital boasted one of the lowest rental yields in the country, standing at just 5.7%, compared with the national average of 6.2%. The figure is also noticeably lower than the most profitable regions of the UK – the North West, North East, West Midlands and Wales – all of which commanded average rental yields of 6.4%.

This is despite the fact that void periods have been decreasing in the capital, with just one in five central London landlords experiencing this in the last three months (down 0.7% from the previous quarter). Conversely, the highest incidence of void periods was in the North East and East Midlands where more than two in five landlords experienced it in the last quarter.

Given that voids are fewer and rents are higher, the fact that yields are so much lower in the capital could come as a surprise. But, look a little deeper and it makes a lot of sense.

London rental prices may be high, but the properties themselves cost an equally extortionate amount, meaning landlords in the capital will generally spend far more servicing their properties than elsewhere in the country. Once the likes of mortgage costs have been factored in, it’s no wonder that rent is so high – or that yields are so low.

Phil Rickards, of BM Solutions, commented: “London has long been seen as the centre of the rental market, with demand outstripping supply and the shortest void periods. However, for the greatest return, looking further afield may be just as an attractive option with rental yields clearly higher out of the capital.”

Another interesting revelation from the study is that demand in the capital isn’t as high as some other parts of the country. Tenant demand has increased by just 23% in outer London and 13% in London central, while the South East and Scotland have seen increases of 43% and 42% respectively.

Nonetheless, it doesn’t look like rents will fall in the foreseeable future. In fact, 26% of landlords surveyed plan to increase the level of rent commanded in the near-future, by an average of 3.5%. This would mean an additional £25 on the average rent of £715 – and arguably more in London.

But, no matter where you are in the country, it can’t be denied that buy-to-let can be profitable. A combination of the right property, the right location and, of course, the right mortgage, can offer the potential of great returns. So, if it’s time to get on board, make sure you check out our pick of the top BTL mortgages to see if you could reap the rewards.

Click here to read the original article: “London least profitable place to be a landlord”