Lower-income areas make for the best buy-to-let investments

The latest research from lettings management platform, Howsy, has revealed that when it comes to the best buy-to-let investments, lower-income areas provide higher yields when compared to areas with higher annual incomes. 

Howsy looked at each local authority across the UK and the average net annual income as well as the average rental yield on offer.

The research shows that areas home to the lowest annual net income (£20,000-£25,000) were also home to the lowest average rental cost at £453 per month. The average rent climbs consistently higher as the average annual income increases, with areas home to an average income of £45,001 or higher also home to an average rent of £1,606 per month; 255% higher than the lowest income areas.

However, while rents may be higher, areas with the highest average income don’t make for the best buy-to-let investment where yields are concerned. 

In UK areas with the highest average monthly income, the average rental yield is currently just 3.4%. 

This average yield then increases consistently as the average net salary starts to drop.

In areas where the average monthly earnings are just £20,000-£25,000, the average rental yield is the highest of all at 5.1%.  

Founder and CEO of Howsy, Calum Brannan, commented: 

“There’s a common misconception that you need to invest big and in an affluent area if you want a stress-free, high return investment in the buy-to-let market, but this is rarely the case.

Areas with higher earners are always going to require a much largest investment cost upfront. We’ve also seen the huge problems posed in the most affluent areas of London, in particular, whereby professional crooks take over a property to sub-let for months on end to the financial detriment of the landlord.

This sort of practice isn’t as prevalent at the more affordable rental thresholds and, in fact, these areas of the market are often where the best tenants are found. The bonus for landlords investing in this segment of the market is that investment costs are lower and as a result, yields are much more favourable.

Should any problems arise, the cost to return a property back to its original standard is also far lower and so all in all, a less affluent area is actually the best place to invest.

Today platforms such as Howsy and additional offerings such as Howsy Protect allow for a more stress-free experience should any problems arise. Not only is the management of a buy-to-let portfolio far easier, but rents are guaranteed and any damages that may arise as a result of a tenant are also covered.”