Fastest-growing buy-to-let returns seen in Reading and Brighton

As anxious as many landlords are to find the right deposit replacement warranty to avoid the hassle of accepting and protecting tenant deposits, if there's one priority that's even greater for many investors, it's ensuring the maximum rental return. On that front, it looks like Reading and Brighton are the emerging hotspots, recording the biggest rises in rental returns over the past 12 months, according to HSBC research.

Such increases of more than 12 per cent in the two commuter towns show how they have become more and more in favour among young professionals priced out of London living. The analysis was based on figures from the home.co.uk website and the Land Registry, and found that Reading had a £950 average monthly rent. That, combined with an average property price of £207,934, resulted in a 5.48 per cent average yield for landlords, compared to the 4.86 per cent recorded a year earlier.

Brighton, meanwhile, saw properties sold for an average of £242,535, average monthly rents of £1,248 meaning an increase in the average yield from 5.58 per cent to 6.16 per cent. Almost a quarter of the housing stock in Reading was rented, according to the bank, that figure rising to 28 per cent for Brighton. Other cities to see marked buy-to-let yield growth over the past year include Bristol, Bournemouth, Cheltenham, Oxford and Manchester, all exciting news for deposit replacement warranty policyholders in these areas.

Peter Dockar, HSBC head of mortgages, commented: "Landlords are reaping the benefit as young professionals say goodbye to capital living in favour of more affordable commuter towns. Despite the inevitable increase in commuter costs associated with moving further out, many still feel it is worthwhile in order to save towards property deposits."

He added that while even houses in these areas were often unaffordable for many first-time buyers, they were within greater financial reach for many landlords investing in property, rents and returns both being driven up by the demand from young professionals.

The biggest monthly return overall, however, was seen in Southampton, where an average house price of £143,011 alongside a £1,040 average monthly rent equated to an 8.73 per cent return, up from the previous year's 7.82 per cent. Strong demand for rented property in the city clearly has much to do with its coastal location for seasonal workers and holidaymakers, as well as university students.

Prospective deposit replacement warranty policyholders in London, meanwhile, are advised to look towards to the borough of Newham, where a 6 per cent yield was recorded in the survey as a result of a £239,942 average house price and average monthly rent of £1,200.

Editor’s Note: Advanced Rent (http://www.advancedrent.co.uk) is represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.