Research by independent London estate and letting agent, Benham and Reeves, has looked at where across the UK and London offers the best buy-to-let investments when it comes to rental return and the speed at which annual rent will repay the original average house price.

Benham and Reeves looked at average house price plus the cost of buy-to-let stamp duty and annual rent and ranked each area on the number of years it would take for this annual rent to recoup the cost of buying in each area and paying stamp duty.

Across the UK, Scotland offers the quickest return on investment with the annual rent returning the original asking price in 17.7 years. Northern Ireland was the second quickest at 18.9 years, followed by England (25 years) and finally Wales at 26.4 years.

In the capital, Tower Hamlets is the best buy-to-let investment for the fastest return, with annual rental income taking 21.4 years to return the average house price and stamp duty costs of £452,821.

Barking and Dagenham (22 years), Newham (23 years), Greenwich (23.5 years) and Enfield (25.7 years were also amongst some of the best options in the capital.

With Scotland and Northern Ireland home to the quickest return on a top level, it’s no surprise that they account for the top three quickest areas in the UK, with Glasgow the quickest of them all at 13.3 years followed by Belfast at 15.8 years and Aberdeen at 17.8 years.

Nottingham was the quickest area in England to see rental income recoup the cost of buying a property at 18.4 years, followed by Newcastle at 18.5 years.

Director of Benham and Reeves, Marc von Grundherr, commented: 

“Buy-to-let investment is a complicated business, even more so given the changes to the sector of late, however, the primary indicator of a good investment is always going to be the rental yield available.

While a buy-to-let investment includes all sorts of additional concerns such as contingency budgets, capital growth and so on, we wanted to highlight on a more digestible level where offers a good investment option when it comes to recouping the cost of that investment via your rental income.

What this research demonstrates is that while buy-to-let remains a lucrative business despite the Government’s attempts, it should be viewed as a long-term one and not a method for making a quick buck. For those serious about the sector whether it be as a professional or amateur landlord, it’s important to understand the commitment before diving in if you wish to see a profit.”

 

By Country
Location
Average house price
Stamp duty
Combined cost
Average rent (per year)
Years to recoup investment
England
£243,128
£9,656
£252,784
£10,128
25.0
Wales
£158,696
£4,760
£163,456
£6,182
26.4
Scotland
£149,461
£6,067
£155,528
£8,786
17.7
Northern Ireland
£134,811
£4,240
£139,051
£7,344
18.9

 

By London Borough
Location
Average house price
Stamp duty
Combined cost
Average rent (per year)
Years to recoup investment
Tower Hamlets
£428,538
£24,283
£452,821
£21,144
21.4
Barking and Dagenham
£300,517
£14,041
£314,558
£14,316
22.0
Newham
£370,525
£19,642
£390,167
£16,956
23.0
Greenwich
£372,803
£19,824
£392,627
£16,704
23.5
Enfield
£397,193
£21,775
£418,968
£16,284
25.7
Southwark
£499,353
£29,948
£529,301
£20,460
25.9
Brent
£464,522
£27,161
£491,683
£18,984
25.9
Lambeth
£498,431
£29,874
£528,305
£20,040
26.4
Hackney
£563,134
£35,050
£598,184
£22,272
26.9
Ealing
£471,561
£27,724
£499,285
£18,384
27.2
Lewisham
£397,335
£21,786
£419,121
£15,360
27.3
Wandsworth
£572,014
£35,761
£607,775
£22,260
27.3
Hounslow
£404,615
£22,369
£426,984
£15,552
27.5
Croydon
£359,336
£18,746
£378,082
£13,596
27.8
Havering
£362,698
£19,015
£381,713
£13,620
28.0
Redbridge
£410,799
£22,863
£433,662
£15,204
28.5
Merton
£514,903
£31,192
£546,095
£18,912
28.9
Sutton
£368,520
£19,481
£388,001
£13,368
29.0
Hillingdon
£410,804
£22,864
£433,668
£14,940
29.0
Richmond upon Thames
£657,364
£42,589
£699,953
£24,000
29.2
Bexley
£342,993
£17,439
£360,432
£12,312
29.3
Waltham Forest
£435,765
£24,861
£460,626
£15,636
29.5
Barnet
£515,882
£31,270
£547,152
£18,420
29.7
Harrow
£458,632
£26,690
£485,322
£16,308
29.8
Hammersmith and Fulham
£676,133
£44,090
£720,223
£24,060
29.9
Islington
£642,894
£41,431
£684,325
£22,848
30.0
City of Westminster
£912,082
£62,966
£975,048
£32,508
30.0
Haringey
£535,659
£32,852
£568,511
£18,240
31.2
Bromley
£442,388
£25,391
£467,779
£15,000
31.2
Kingston upon Thames
£482,969
£28,637
£511,606
£16,260
31.5
Camden
£774,313
£51,945
£826,258
£25,404
32.5
Kensington and Chelsea
£1,163,716
£95,033
£1,258,749
£38,076
33.1
City of London
£860,634
£58,850
£919,484
£26,268
35.0

 

By City
Location
Average house price
Stamp duty
Combined cost
Average rent (per year)
Years to recoup investment
Glasgow
£129,764
£5,190
£134,954
£10,140
13.3
Belfast
£128,386
£3,919
£132,305
£8,364
15.8
Aberdeen
£148,236
£5,994
£154,230
£8,676
17.8
Nottingham
£143,297
£4,664
£147,961
£8,040
18.4
Newcastle
£153,442
£5,172
£158,614
£8,556
18.5
Manchester
£178,039
£6,401
£184,440
£9,888
18.7
Derry City and Strabane
£120,651
£3,619
£124,270
£6,300
19.7
Leeds
£184,517
£6,725
£191,242
£9,144
20.9
Edinburgh
£263,868
£13,348
£277,216
£12,816
21.6
Lisburn and Castlereagh
£160,301
£5,515
£165,816
£7,608
21.8
Bristol
£274,351
£11,948
£286,299
£12,888
22.2
Liverpool
£131,276
£4,063
£135,339
£5,988
22.6
Sheffield
£161,475
£5,573
£167,048
£7,356
22.7
Birmingham
£186,806
£6,840
£193,646
£8,520
22.7
Swansea
£146,712
£4,401
£151,113
£6,624
22.8
Portsmouth
£207,033
£7,851
£214,884
£9,408
22.8
Southampton
£208,692
£7,934
£216,626
£9,456
22.9
London
£463,283
£27,062
£490,345
£20,148
24.3
Leicester
£165,258
£5,762
£171,020
£7,020
24.4
Cardiff
£207,531
£7,189
£214,720
£8,796
24.4
Bournemouth
£256,579
£10,526
£267,105
£10,344
25.8
Oxford
£414,972
£23,197
£438,169
£16,824
26.0
Plymouth
£176,973
£6,348
£183,321
£6,936
26.4
Newport
£179,301
£5,379
£184,680
£6,463
28.6
Cambridge
£436,255
£24,900
£461,155
£14,688
31.4

 

Sources:
House Price Data (Gov)
Private Rental Data (Gov)
Stamp Duty Calculators
Other info