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HSBC Identifies Buy to Let Hotspots in England & Wales

- Southampton tops the list with a rental yield of 7.82%

LONDON, UNITED KINGDOM -- (Marketwired) -- 04/20/13 -- Rental yields of 7.82% and private rental accommodation making up almost a quarter of its housing stock make Southampton the best place in England and Wales for buy to let (BTL) investors according to research from HSBC.

Of the fifty towns and cities with the highest concentration of private rental housing stock, Southampton topped the list for rental yield due to relatively affordable housing and an average rent of GBP 901 per month. The relatively inexpensive property prices in Blackpool, Hull Manchester and Nottingham mean that these four Northern areas make up the rest of the top 5, offering strong returns for BTL investors with yields of 7.81%, 7.77%, 7.60% and 7.55% respectively. In sixth place, Coventry is the only other city offering returns above seven per cent with a yield of 7.13%.

Despite the high proportion of private rentals in the capital, London does not score highly in terms of rental yields due to the comparably high property prices. The top performing borough in the capital, Southwark, is 13th overall while the affluent London boroughs of Hammersmith and Fulham and Kensington and Chelsea are ranked in the bottom two places in the top 50 due to the high initial outlay to purchase a property, generating returns of just 3.42% and 3.34% respectively.

Table 1: Top 10 BTL Hotspots by Rental Yield


----------------------------------------------------------------------------
                                     Average    Average Rent    Rental Yield
Location                      Property Price       (Monthly)         (gross)
----------------------------------------------------------------------------
Southampton                      GBP 138,311         GBP 901           7.82%
----------------------------------------------------------------------------
Blackpool                         GBP 75,943         GBP 494           7.81%
----------------------------------------------------------------------------
Kingston upon Hull                GBP 69,519         GBP 450           7.77%
----------------------------------------------------------------------------
Manchester                       GBP 102,631         GBP 650           7.60%
----------------------------------------------------------------------------
Nottingham                        GBP 83,313         GBP 524           7.55%
----------------------------------------------------------------------------
Coventry                         GBP 104,970         GBP 624           7.13%
----------------------------------------------------------------------------
Slough                           GBP 171,581         GBP 975           6.82%
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Oxford                           GBP 244,893       GBP 1,375           6.74%
----------------------------------------------------------------------------
Liverpool                         GBP 91,012         GBP 498           6.57%
----------------------------------------------------------------------------
Portsmouth                       GBP 141,971         GBP 775           6.55%
----------------------------------------------------------------------------

Seaside Towns

Due to holiday rentals and seasonal work, many seaside towns are BTL hotspots with 17 of the top 50 areas found on the coast. Blackpool tops the seaside town list with a yield of 7.81%. The rest of the top ten is made up of southern seaside areas, including holiday destinations such as Brighton, Bournemouth and Eastbourne. While property prices tend to be higher in these areas, rents are also above average, meaning yields are strong for investors.

Table 2: Top 10 Seaside BTL Hotspots by Rental Yield


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                                     Average    Average Rent    Rental Yield
Location                      Property Price       (Monthly)         (gross)
----------------------------------------------------------------------------
Blackpool                         GBP 75,943         GBP 494           7.81%
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Bournemouth                      GBP 170,493         GBP 825           5.81%
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Brighton and Hove                GBP 229,622       GBP 1,049           5.48%
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Torbay                           GBP 139,168         GBP 598           5.16%
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Southend-on-Sea                  GBP 152,171         GBP 650           5.13%
----------------------------------------------------------------------------
Shepway                          GBP 181,399         GBP 695           4.60%
----------------------------------------------------------------------------
Eastbourne                       GBP 177,408         GBP 675           4.57%
----------------------------------------------------------------------------
Isles of Scilly                  GBP 180,227         GBP 654           4.35%
----------------------------------------------------------------------------
Hastings                         GBP 177,408         GBP 550           3.72%
----------------------------------------------------------------------------
Thanet                           GBP 181,399         GBP 524           3.47%
----------------------------------------------------------------------------

London

Due to London's high property prices, its rental yields are relatively modest on the whole. Southwark tops the list of boroughs with a yield of 6.15%. Areas in Outer London offer some of the strongest yields in the capital including Newham, Enfield, Brent and Kingston upon Thames. Just three of the top ten areas are in inner London and each of these is in the East of the city, traditionally the more affordable end of the capital.

Table 3: Top 10 London BTL Hotspots by Rental Yield


----------------------------------------------------------------------------
                                     Average    Average Rent    Rental Yield
Location                      Property Price       (Monthly)         (gross)
----------------------------------------------------------------------------
Southwark                        GBP 401,405       GBP 2,058           6.15%
----------------------------------------------------------------------------
Newham                           GBP 229,141       GBP 1,126           5.90%
----------------------------------------------------------------------------
Enfield                          GBP 261,163       GBP 1,200           5.51%
----------------------------------------------------------------------------
Brent                            GBP 337,723       GBP 1,517           5.39%
----------------------------------------------------------------------------
Kingston upon Thames             GBP 333,122       GBP 1,363           4.91%
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Hounslow                         GBP 285,927       GBP 1,148           4.82%
----------------------------------------------------------------------------
Wandsworth                       GBP 428,987       GBP 1,694           4.74%
----------------------------------------------------------------------------
Lewisham                         GBP 283,031       GBP 1,101           4.67%
----------------------------------------------------------------------------
Tower Hamlets                    GBP 364,296       GBP 1,387           4.57%
----------------------------------------------------------------------------
Harrow                           GBP 306,381       GBP 1,148           4.50%
----------------------------------------------------------------------------

Peter Dockar, head of mortgages at HSBC commented, "Buy to let remains a good investment for those looking for above average returns. Twenty-three of the top 50 areas offer yields above 5%, significantly more than is available from more traditional savings 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."

HSBC offers a range of competitive Buy to let mortgages for its current account customers. For more information visit hsbc.co.uk/buy-to-let-mortgages.

HSBC Bank plc: HSBC serves 16.1 million customers in the UK and employs approximately 52,000 people. In the UK, HSBC offers a complete range of personal, premier and private banking services including bank accounts and mortgages. It also provides commercial banking for small to medium businesses and corporate and institutional banking services. HSBC Bank plc is a wholly owned subsidiary of HSBC Holdings plc.

The HSBC Group: HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 7,500 offices in over 80 countries and territories in Europe, the Asia-Pacific region, North and Latin America, and the Middle East and Africa. With assets of US$2,556bn at 31 December 2011, HSBC is one of the world's largest banking and financial services organisations.

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