Glasgow leads the way for rental yields

Poor rental yields is one of the biggest complaints of investors in the London property market at the moment. Well that has been my experience when talking to investors over the last few weeks. Take for example the landlord I met last week who was discussing his poor rental returns. With a yield of under 4%, after paying fees, service charges and mortgage payments he was barely generating any income from his investment. And with talk of interest rates rising soon, he is increasingly concerned that this will diminish further.

However, outside London, rental yields remain attractive. Recently published data by the peer-to-peer lending platform, LendInvest, analysed average rental yield for over 1,200 postcode areas across the UK. According to the data, 3 of the 10 highest rental yielding postcode areas are to be found in Glasgow (G34 11.9%, G21 10.1% and G22 9.2%). Indeed Glasgow provides 11 of the top 25 areas, more than any other city – Birmingham provided 4 areas, Manchester and Liverpool 2 each. At the bottom of the table, 8 of the 10 lowest yielding properties were in London, averaging a rental yield of a measly 2.3%.

Overall, Glasgow came top of the major cities in the UK with average rental yields of 6.9%, above Liverpool (6.2%), Edinburgh (5.9%), Birmingham (5.7%), Leeds (5.7%) and 60% higher than London (4.3%).

Average Rental Yields

So what does this mean for Glasgow buy-to-let investors? Well with the highest yields in the UK, Glasgow Landlords are less exposed to increased interest rates and are able to generate higher incomes (especially compared to what they can earn from a savings account at a bank). And higher yields also make an investment self-funding at a higher loan to value percentage, allowing the investor to put in less upfront equity.  

Savvy investors know that, whilst yield is important it is not the only factor to be considered when looking for a buy-to-let investment in Glasgow. Location, state of the property and common areas and potential for capital growth all need to be taken into account.

If you are considering buying a property for buy to let investment in Glasgow, at Douglas Dickson we are always happy to give you our unbiased opinion on which property to buy (or not as the case may be). Please feel free to contact me on 07984 619 124 or via email: derek.livingstone@douglasdickson.co.uk.