Sunderland has been named the UK’s highest-yielding city for buy-to-let investment, with landlords potentially achieving average gross returns of 9.3%, according to new analysis.
Research by Landlord Resource, using Zoopla data, places the North East city ahead of Aberdeen and Burnley as comparatively low property prices continue to support stronger headline rental yields across northern Britain.
Sunderland has an average property price of £84,924 and monthly rent of £659, producing an estimated gross yield of 9.3%.
Aberdeen ranks second at 8.3%, based on an average property price of £106,170 and monthly rent of £734, while Burnley completes the top three at 8.2%, with properties averaging £92,473 and rents of £634.
NORTH-SOUTH YIELD DIVIDE
The analysis points to a significant geographic divide in potential landlord returns.
Dundee, Middlesbrough, Hull, Glasgow, Liverpool and Newcastle also feature among the 10 highest-yielding locations, giving Scotland and northern England a strong presence in the rankings.
At regional level, the North East and Scotland both produce an estimated average yield of 7.9%, followed by the North West.
However, Landlord Resource cautions investors against selecting locations based solely on headline gross yields.
Saif Derzi (main picture, inset), Property Advisor at Landlord Resource, says: “There’s lots of information out there when it comes to picking the right location for a buy-to-let property, and it can be overwhelming knowing who to trust.
“Before basing your buying preferences on a yield figure, you should cross-check at least two independent sources – this could include a housing portal and a lending tracker.
“While the latest data suggests that buy-to-let opportunity in the North is great for a return on investment, it will cost you growth as a result. Typically, housing prices in Southern England have risen nearly twice as fast in the past decade as compared with northern counterparts.”
LOOK BEYOND CITY AVERAGES
Derzi also warns that city-wide figures can disguise substantial differences between individual neighbourhoods and properties.
He adds: “For those looking to pick an area imminently, they should note that city-level rankings are too coarse to buy on. You need to be honing in on exact locations, and the yield gaps between different city locations and local areas can be extreme.
“Run a deal through Landlord Resource’s Rental yield calculator, and compare gross yields, net yields, monthly cash flow, and whether the property passes renter stress tests.”
