Colchester in Essex is the top area to invest in buy-to-let based on capital growth, transaction volumes, rental yield and rental price growth, LendInvest research shows.
In Colchester prices are rising by 9.98% per year, rental growth is increasing by 3.41%, transaction volumes are rising by 2.79% and yields stand at 3.71%.
Despite topping LendInvest’s list Colchester is far from the best in terms of yield, with Manchester offering returns of 5.42%.
Ian Boden, sales director at LendInvest, said: “We don’t subscribe to the idea of a mass house price growth slowdown throughout the country. Instead we wanted the Index to show us where the slowdown is hitting hardest, and where the opportunities continue to abound for UK landlords and property investors alike.
“Predictions for the overall growth of the housing market remain positive for the year ahead but this quarter’s Index indicates that house price growth slowdown is impacting on different regions to different degrees.
“There are reasons to be cheerful in many places around the country. Looking at the South West and the Midlands in particular, we can see modest slowdown occuring that’ll keep market activity buoyant.”
Other top areas to invest in buy-to-let are Northampton, Leicester, Luton, Birmingham, Manchester, Ipswich, Brighton, Rochester and Norwick.
Boden added: “Striking the right balance when it comes to making property investment decisions is crucial; however, the current limitations in house price growth mean fewer opportunities in the market to perform a traditional “flip” of a property to get a return.
“We can expect to see investors taking longer-term positions in property as they look to yields and rental price growth as valuable metrics in the short-term to determine the profitability of an asset.
“The best way for investors to take advantage of the volatility in the rental market is to seek out buy-to-let opportunities.”
The worst area to invest is in East Central London, where capital gains are falling by 3.76%, rental price growth is sliding by 1.1% and transaction volume growth is down 1.73% year-on-year. Despite all of these factors landlords in that area still make a yield of 2.9%.