Liverpool named number one BTL hotspot

Liverpool has been named as the UK's number one buy-to-let (BTL) hotspot.

New analysis from Private Finance found the Merseyside city offers rental yields of 8% once mortgage costs are taken into account, benefitting from a combination of low average house prices and strong rents.

This dwarfed the next two best performing locations, with Nottingham and Coventry earning yields of 5.6% and 5.4% respectively.

“It’s not only the residential property market that’s all about location, location, location,” said Shaun Church, director of Private Finance.

“Succeeding in making a long-term profit depends on buying an affordable property and being confident its value will appreciate at a higher rate than mortgage borrowing.

“However, for more immediate returns, landlords can optimise rental yields by choosing their buy-to-let location carefully.”

Blackpool, Cardiff and Lincoln were among those also named in the top-10 BTL hotspots.

Just three of the locations were located in the South of England and this was restricted exclusively to coastal towns Portsmouth, Bournemouth and Southampton.

According to the research, six of the 10 areas with the lowest house prices were also in the top-10 BTL hotspots list.

Despite this, none of the locations with the top-10 highest average rents were considered BTL hotspots.

Some areas of London could earn rents of up to £5,000, however these come associated with hefty purchase costs.

Homes in Kensington and Chelsea have an average house price of £1.4m and mortgage costs of £27,855 per year, making them better suited to landlords with large cash sums to contribute alongside a mortgage.

“When purchasing with a mortgage, landlords should keep in mind that the larger the loan, the higher their mortgage costs will be,” added Shaun.

“Now that tax relief on mortgage interest is being restricted, keeping mortgage costs down is particularly important.”

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