Landlords in Glasgow are generating the best returns, based on the cost of renting against the average house price, Pepper Money analysis shows.
The average annual rent in the city was over £14,700, while mortgage repayments totalled just over £11,100, resulting in a profit of over £3,000 in this popular Scottish city.
Belfast also proved favourable for landlords seeking a strong investment return. The largest city in Northern Ireland ranked second for potential first-year profits, with £2,856. Belfast had the fourth-lowest average property prices in the study, meaning mortgage costs were more affordable, leading to the city’s profitability.
London, Cardiff, Sheffield, Swansea, Milton Keynes, and York are all unprofitable due to high mortgage costs in relation to rental income.
Only 8% of landlords bought a property last year, according to a study by Pegasus Insights. Many are cautious about the potential impact of the Renters’ Rights Bill, as well as changes to national insurance and capital gains tax.
In the longer term 19 of 25 UK cities are profitable, with Portsmouth and Manchester becoming more profitable over that time.