Where would you find the best yield and the most capital growth in the UK buy-to-let market?
With mortgage rates so low, it is quite possibly the best time to invest in UK buy-to-let properties. Over the past year the average rate on five-year fixed rate loans dropped from 4.65% to 4.25% and for two-year, from 3.94% – 3.45%.
Not only are mortgages better value but there has been a huge increase in the number of mortgages on offer as well. At this time last year there were 55 five-year and 16 two-year fixed rate mortgages, now there are 143 and 83 respectively.
So for many, it is not a question of if but where to invest in the UK buy-to-let market.
Surprisingly, in a recent survey by Savills, London does not feature that much and the majority of the best investments are found outside of the capital.
The best return on capital growth is found in the city of York due to its relatively low house price and strong student tenant market. Guildford and Woking offer the second and third best growth in relation to upfront payment in the UK.
In terms of yield, Greenwich is top in the UK followed by Peterborough and Newcastle. Interestingly, apart from Greenwich, London does not feature again in the UK top 10 for average rental return against value.
London does however top the list of worst returns on investments for the UK. Last year, a HSBC survey on rental yields found that Kensington and Chelsea were the worst places to invest in buy-to-let properties followed by Thanet and Hastings. This has been put down to the high price of housing in the capital compared to the northern counterparts.